Posted on February 13, 2025, by Niftynews
Bharat Forge Shares fell sharply by 5% on February 13, 2025, after the company reported disappointing third-quarter (Q3FY25) results. The stock, which was trading at Rs 1,047 per share, has been on a downward trajectory for the past six months, shedding more than 30% of its value during that period. This decline has significantly underperformed the broader Nifty 50 index, which has dropped by just 4% over the same time frame. The weak quarterly performance coupled with the significant drop in the stock price has raised concerns among investors, leading many to reassess their position on Bharat Forge shares.
Q3FY25 Financial Performance and Key Metrics
Bharat Forge, one of India’s leading manufacturers of automotive components, reported a 16.4% year-on-year (YoY) decline in net profit for Q3FY25. The company’s net profit stood at Rs 212 crore, down from Rs 253 crore in the same quarter last year. This decline was primarily driven by a 7.4% YoY drop in revenue from operations, which amounted to Rs 2,095 crore for the quarter. Additionally, EBITDA (earnings before interest, taxes, depreciation, and amortization) for the period fell by 8% YoY to Rs 609 crore, resulting in an EBITDA margin contraction of 20 basis points (bps) to 29.1%.
The Bharat Forge share price has been volatile in recent months, and these disappointing results have only added to the uncertainty surrounding the stock. However, despite the weak earnings, the company has continued its commitment to shareholders by declaring an interim dividend of Rs 2.50 per equity share. This dividend will be paid on or before March 12, 2025, with February 18 as the record date for determining eligible shareholders.
Challenges Behind Weak Performance
The weak performance of Bharat Forge can be attributed to a combination of factors, including economic slowdowns and geopolitical issues. The company’s operations in the European Union (EU) were notably affected by sluggish economic conditions, which led to lower demand and exports from the region. Additionally, the company’s defence segment—a key revenue driver—was also impacted by the inherent volatility in the defence business, which is subject to long-term contract cycles and varying demand levels.
Despite these challenges, Bharat Forge has shown resilience in securing new orders, which could provide a much-needed boost to future revenue. The company won new orders worth Rs 830 crore across various business verticals during Q3FY25. Notably, its defence segment contributed Rs 337 crore in revenue during the quarter, while fresh order wins amounting to Rs 97 crore boosted its executable order book to Rs 5,706 crore as of December 31, 2024.
Management’s Optimism Amidst Weak Quarter
Bharat Forge Chairman and Managing Director, BN Kalyani, acknowledged that this was the first time in the company’s history they had experienced such a weak quarter. Despite these challenges, Kalyani remained optimistic about the long-term prospects, especially in the defence sector, which he believes will drive growth in the coming years.
The company is forecasting a revenue surge to Rs 2,200 crore in FY26 for its defence business, which is expected to see annual growth in double digits. Kalyani also expressed confidence that the opportunities in the defence sector would continue to be strong, which could positively impact the Bharat Forge share price in the long run.
What’s Next for Bharat Forge Shares?
Although Bharat Forge has faced significant challenges in Q3FY25, particularly in its European operations and defence segment, the company’s order book and long-term prospects in defence provide some hope for recovery. The Bharat Forge share price has been on a steep decline in recent months, but analysts believe that the stock could rebound if the company successfully capitalizes on its new orders and the growing demand in the defence sector.
The stock’s performance in the coming quarters will depend on several factors, including the recovery of its European business, the stability of the defence market, and the overall economic environment. As Bharat Forge continues to navigate these challenges, investors will be keeping a close eye on the company’s ability to secure new contracts and deliver consistent growth in its defence segment, which could drive the Bharat Forge share price back up.
