Balu Forge Industries Ltd (BFIL) has secured a five-year memorandum of understanding with a NATO-affiliated entity for artillery shell supply, marking its formal entry into the NATO supply chain. According to latest reports, the agreement covers 30,000 units of 155 mm M107 shells and 10,000 units of 152 mm shells each month, exceeding the company's current capacity of 360,000 units annually. The shells will be delivered empty in 'Ready to Fill' condition at $315 per unit (around ₹29,000), with supply beginning in April 2026 and ramping up in phases. Industry analysis indicates a persistent global shortage of 155 mm ammunition, the standard calibre used by NATO field artillery, with demand expected to remain strong for six to seven years driven by replenishment requirements.
BFIL is strategically reducing its agriculture dependence while expanding into defence, aerospace, and other high-precision sectors. As reported by Live Mint, agriculture's contribution to revenue declined from 55% in earlier years to 40% in FY25, with the company targeting further reduction to 25% by FY28. The defence segment increased to 9% in FY25 from previous levels, while the company aims to grow defence, railway, and aerospace segments from 10% to 25-30% of total revenue. The company supplies to 25+ OEMs across more than 80 countries, with 73.5% of revenue generated through exports. Beyond artillery shells, BFIL has approval to supply over 180 defence products, including gear teeth, axles, connecting rods, small arms components, shackles, hooks, gun barrels, and large tank chassis parts.
BFIL demonstrated strong financial performance in FY25 with total consolidated revenue rising 65% year-on-year to ₹941 crore. According to Live Mint reports, EBITDA increased 111% to ₹251 crore with margins expanding 590 basis points to 27.2%, while profit after tax rose 119% to ₹204 crore. In the nine months of FY26, revenue grew 29% year-on-year to ₹844 crore with EBITDA increasing 36% to ₹240 crore and net profit rising 37% to ₹193 crore. The changing revenue mix reflects the ongoing diversification, with agriculture's share falling to 36% while defence increased to 12% in FY25.
To support its diversification into defence and aerospace sectors, BFIL has been commissioning advanced manufacturing assets including 7-axis and 11-axis CNC machining lines commercialized in Q3FY26. As reported by Live Mint, the company expanded its precision machining capacity to 45,000 MTPA and forging capacity to 100,000 MTPA during FY25. Plans include increasing machining capacity to 80,000 MTPA over the next 12-18 months and expanding forging capacity to 150,000 MTPA. The shift toward in-house forging represents a move toward vertical integration, allowing the company to improve margins, strengthen quality control, and reduce reliance on external suppliers.
At ₹455 per share, BFIL trades at a price-to-earnings multiple of 22, below its five-year median of 32 and at a discount to peers including Happy Forgings (43x), AIA Engineering (30x), and AMIC Forging (57x). According to Live Mint reports, the company's diversification strategy is already visible in financial performance, with the changing revenue mix reflecting the shift toward higher-margin defence and aerospace segments. The shell production line alone is expected to generate ₹500-550 crore in revenue at scale, potentially positioning the company closer to specialised forging peers like Bharat Forge which trades at 68x earnings. Promoters recently converted 15 lakh warrants into equity shares at ₹360 per share, signalling continued commitment to the transformation strategy.
