ICICI Securities has upgraded Bharat Forge to BUY from Hold** in its research report dated August 11, 2026. The brokerage has revised the target price to ₹2,400 from the previous target of ₹2,150, representing a significant upward revision. According to the report, the upgrade is based on 40x September 2028E EPS valuation multiple.
Bharat Forge's 1QFY27 standalone adjusted earnings at ₹3.4 billion came in 12% below ICICI Securities' estimate of ₹3.9 billion, primarily due to lower-than-expected margins. The company posted a consolidated loss in Q1 which was attributed to a one-off provision of ₹3.5 billion toward CDP restructuring. As per ICICI Securities, the consolidated EBITDA undershot estimates due to higher inflationary costs, though pass-through negotiations with customers are currently ongoing which should help address cost pressures. The consolidated operating profit margin fell 190 basis points Q-o-Q to 15.3%, with standalone operations declining 240 basis points due to 160 basis points hit from commodity, energy and logistics costs and 170 basis points decline in subsidiary operations.
The company secured new orders worth ₹1,352 crore in Q1, including ₹681 crore from the defence sector, bringing the total defence order book to ₹11,200 crore. Bharat Forge signed its largest-ever naval order for 12 marine gas turbine generator sets for Kolkata-class ships. Revenue growth for consolidated operations was 19%, while standalone growth was 12%, with domestic and overseas operations growing 11-12% each. The industrial segment significantly outperformed the auto segment, with industrial business growing 16% in both domestic and overseas markets, while the domestic auto segment saw only 3% growth and overseas auto grew 10%. ICICI Securities expects Bharat Forge to post a CAGR of 17%/24%/39% in revenue/EBITDA/PAT over FY26-28.
The demand outlook for Bharat Forge remains robust, with gains expected to reflect in the second half of FY27, driven by recovery in Class-8 truck demand (North America) and healthy momentum in the domestic CV segment. The 20-25% growth in Indian manufacturing business is expected in the second half, riding on recovery from overseas operation disruption and new facility ramp-up. The company's defence business ramp-up will be led by execution of current order book, including the ATAGS (advanced towed artillery gun system) and close-quarter battle carbines. Nomura Research believes the fundamental growth drivers remain intact despite the stock correction, expecting strong ramp-up in revenues led by Class-8 truck upcycle, defence and aerospace segments.
