Bharat Forge shares extended losses, falling 10% in the last two trading sessions, following the company's weaker-than-expected Q1 FY27 results. According to Moneycontrol, the stock had emerged as the top loser on the Nifty Midcap 150 on Monday, with the two-day decline despite the stock having gained 42.9% so far in 2026, compared with a 6% fall in the Nifty 50. As of the latest trading sessions, Bharat Forge maintains a market capitalisation of around ₹1 lakh crore. The company's revenue from operations surged 19% year-on-year to ₹4,640 crore for the April-June quarter, driven by broad-based performance in exports, with defence revenue surging 87% YoY to ₹496 crore.
According to Moneycontrol, Bharat Forge reported a consolidated net loss of ₹78.63 crore for Q1 FY27, which sharply missed the CNBC-TV18 poll estimate of ₹349 crore as multiple one-offs led to an exceptional loss of ₹358 crore. The company's revenue rose 18.7% year-on-year to ₹4,640 crore, ahead of the poll estimate of ₹4,591 crore. However, EBITDA increased to ₹709.4 crore from ₹670 crore a year earlier, while the EBITDA margin contracted by 170 basis points to 15.29%. In standalone operations, sales volume rose 8% year-on-year to 66,787 tonnes in Q1FY27 while Ebitda/tonne declined 5.4% to ₹87,694 amid elevated energy and input costs. The standalone net profit of ₹321 crore missed CNBC-TV18 estimates of ₹338.5 crore, with standalone revenue increasing 11.5% to ₹2,347 crore in Q1 FY27 as against ₹2,105 crore in Q1 FY26.
According to Moneycontrol, KSSL's defence revenue accounts for 13% of its domestic manufacturing revenue and rose 71% year-on-year in the June quarter, albeit on a low base. Earnings before interest, taxes, depreciation, and amortisation (Ebitda) almost quadrupled year-on-year to ₹73 crore, but it is still a small part of total Indian Ebitda at about 10%. The defence order book stands at ₹11,196 crore as of June 30, 2026, with a key highlight being the signing of its largest naval order for 12 marine gas turbine generator sets with the Ministry of Defence. The company's barring a weak quarter in oil & gas, industrial segment delivered a solid YoY performance driven by strong traction in HHP engines and aerospace, with the momentum expected to pick up in H2 FY27. The aerospace segment will see material improvement in YoY performance as recent orders gradually enter production.
As reported by Bloomberg, Bharat Forge revised the FY27 revenue growth guidance for its Indian manufacturing business from 25% in Q4FY26 to 20-25%, suggesting improving traction in H2FY27. However, this slight tweak to guidance disappointed investors who had expected stronger growth. Based on the market capitalization-to-annual sales ratio of nearly 10x for FY26 for companies like Hindustan Aeronautics and Bharat Electronics, Bharat Forge's defence subsidiary could command a valuation of about ₹15,000 crore even if Q1FY27 revenue is annualized. Since Bharat Forge's current market capitalization is nearly one trillion rupees, the valuation of the residual business excluding defence comes to ₹85,000 crore. The sharp 40% rally in the Bharat Forge stock so far in 2026 suggests investors are betting on the defence business's prospects, but the underlying numbers do not justify the high valuation of 57x consensus earnings for FY27 according to Bloomberg.
Multiple brokerages maintained cautious stances on Bharat Forge following the Q1 results, citing near-term margin pressure and valuations despite expecting growth to strengthen. As per Moneycontrol, Nomura maintained its 'Neutral' rating with a target price of ₹2,260, implying around 8% upside, noting that the Q1 miss was driven by transient factors with the consolidated EBITDA margin at 16.2% against its estimate of 17.8%. CLSA retained its 'Hold' rating with a target price of ₹2,106, saying the standalone EBITDA margin of 25% was broadly in line after adjusting for foreign-exchange losses, with higher gas and commodity costs, and manpower shortages hurting the margin by around 160 basis points during the quarter. InCred also maintained a 'Hold' call with a target price of ₹2,103, highlighting that standalone normalised EBITDA rose 9% year-on-year to ₹620 crore, while MOSL maintained its 'Neutral' rating with a target price of ₹1,931, cutting its FY27 earnings estimate by 7% citing margin pressure. Some brokerages have cut earnings per share estimates for FY27 following the revised guidance and margin pressures.
