Ladies and gentlemen, good day and welcome to the Q4 and FY25 earnings conference call hosted by Bharat Forge Limited . As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Kalyani, the Vice Chairman and Joint Managing Director of Bharat Forge Limited . Thank you, and over to you, sir.
Good afternoon, ladies and gentlemen, and thank you for joining us for our second quarter year-end conference call. I have with me our Head of Finance, Kedar Dixit, Head of Investor Relations, Rajhagopalan, and our Finance Team member. As usual, I will have them give you an introduction, and then I will take you through the Q&A. Thank you.
Good afternoon. I thank you for the stand-up of this highlights for the fourth quarter and for school years. We had a stable performance in the quarter with revenues of INR 2,163 crore.
I'm sorry to interrupt, sir. Please keep someone a little closer to the microphone. Thank you.
Yeah, we had a stable performance in the quarter with revenues of INR 2,163 crores, with a personal quarter growth of 3%. Stand-alone EV lines used Q4 grew by 6.7%, which is very Q3, and INR 629 crores. After getting a margin of 29.1%, which is about 136 basis points higher than last quarter. Also, in this quarter, we had an exchange loss of INR 12 crores, and in last quarter, we had an exchange gain of INR 20 crores. If you address that, then you will see a 100% margin improvement. PBT for exceptional items was INR 494 crores, which was a 4% quarter-over-quarter. On a full-year basis, revenue was at INR 8,144 crores, and EBITDA was at INR 2,524 crores, with a margin of 28.5%, again a 10-100 basis point expansion in margins which we have in last year.
Our balance sheet continues to be robust, with corporate funds network long-term loans at about INR 1,336 crore. For acquired ROCE network, ROCE was 18.1%. At a consolidated level, Q4 revenue was at INR 35,853 crore, which was 7.5% lower on a year-over-year basis. However, EBITDA was higher, translating into a margin expansion of 170 basis points, which is largely on account of reducing the losses for our overseas operations as well as in India, and we continue to do that. In acquired ROCE files, consolidated revenue was 3.6% lower, at INR 15,123 crore. Operationally, EBITDA margin improved by 180 basis points on a year-over-year basis, to 18.2%. During the year, the company secured new business worth INR 6,959 crore across all key businesses. Defense was about INR 5,000 crore. ESM stand-alone was normal operations worth INR 1,685 crore, and GS Auto was INR 245 crore. The CAPEX for Indian operations was INR 750 crore.
In FY25, we have completed the CAPEX for our overseas greenfield projects in the U.S. for our Canadian forging, and we don't foresee much of investment in overseas entities for next year. As per overseas subsidiaries are concerned, operations in Europe and region have stabilized. However, given the economic situation in Europe, the utilization was between 60%-65%. U.S. operations have moved into the black for this quarter, therefore it was positive in the INR 4 crores. Also, with the action we have taken in terms of reduction of debt of our overseas entities, we have started seeing the benefit of reduction of interest costs for both European as well as U.S. operations. In FY25, European operations recorded a revenue of INR 96 crores, while U.S. operations narrowed their revenue around to INR 47 crores. But on a quarterly basis, as I mentioned earlier, we are in positive.
Current utilization of aluminum business is about 70% for U.S.. We continue to work on our restructuring of options for European steel operations, and we will update on the progress in due course. I'll hand over to.
Yeah, good afternoon, ladies and gentlemen. On the stand-alone basis, I think we've had reasonable performance in 2025 with 100 basis points margin improvement and a strong, robust balance sheet. A few things that stand out are the fact that the business is becoming more diversified and resilient. Over the 2019 to 2025 timeframe, industrial exports have been flat at around INR 1,600 crore, despite oil and gas declining from around INR 1,100-1,200 crore to about INR 400 crore. This drop has been compensated by other areas such as high horsepower and aerospace. Aerospace is now 15% of industrial exports. It has grown 4X in the past five years, and we expect this to continue growing at a high pace going forward. We are now setting up a new dedicated forging and machining facility for aerospace, backed by both business wins and customer commitments, including financial commitments.
You will witness one new business adding to the growth of industrial exports in the next three to four years. Overseas, as I mentioned, we continue to evaluate all our options for the European businesses, but our aluminum business in Europe and North America is now falling in place. Already in North America, we are seeing substantial improvement, and as the VP capacity utilization goes up in Europe, that will also impact positively the European aluminum forging business. In the casting space, I'm very happy to report that our teams at GS Auto have performed exceedingly well and delivered on the promise that we felt they had during the acquisition. We have now a 15% plus EBITDA margin with doubling of profit in 2025. We have added a lot of new customers, and we are on a solid growth trajectory to a four-digit number shortly.
In defense, we expect to see a 15%-20% growth in FY2026. We have a strong order book. There are lots of opportunities both in India and outside. As I mentioned, our order book is almost INR 9,500 crore. We have many new programs that we are working on, which will convert into orders in the coming years, and a lot of new geographies that we will open up this year. In terms of e-mobility, we are now very hopeful that our products are at maturity, and we should start seeing revenue progression going forward this year, including moving toward black numbers towards the end of the second half of the year. In terms of M&A, we have now received the TCA approval for our American Axle India assets transaction. We expect to conclude this transaction by the end of June.
I think this is going to be another good opportunity for us to grow our market penetration and our presence and content formation going forward. The one thing that I want to mention is, due to the U.S. tariff situation, there is a lot of uncertainty. Nobody has an answer right now. I think we all have to wait and watch. What I'm convinced of is that as a manufacturer, we have the right products, the right technology, a very good cost structure, and extremely strong customer relationships, and that we will tide over the situation both as a company and as a country. I think India will be in a, let's say, neutral position to advantageous position, least of the many other places.
I think this could give a significant opportunity to Indian companies to both manufacture in India and to partner with global companies for mutually beneficial opportunities. Thank you. I think we can now go to Q&A.
Thank you, sir. Ladies and gentlemen, we will now begin with the question and answer sessions. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. We will wait for a moment while the question queue assembles. The first question comes from the line of Gunjan Prityani from Bank of America. Please go ahead.
Yeah, hi, team. Thanks for taking my question. My first question is just trying to understand that now, of course, we do not know how the tariff situation sort of eases, but at the moment, what is the sort of conversations that you are having with the customers? I just also want to be clear, is the tariff already under implementation as far as you are exposed to U.S. food?
Currently, as you know, the tariff applies to shipments that have left India after fiscal reason. We have time until the third week of May, number one. Number two is, at this point, there is clarity that the tariff will be applicable only for the passenger car segment, or so far the automotive tariff that we are talking about will be applicable for the passenger car segment or rice products. The third part of it is that we are engaged with all our customers, and all our customers are talking positively in terms of taking over the tariff from our side. We won't export the tariffs as what we think, but that's after the discussions ongoing with all the customers and considering the situation in the U.S.
Okay. Just going back to the point you mentioned only to the pass car segment, on the truck, on the CV segment, is that the implicit message that it's not applicable to trucks? There was also a school of thought that forging comes under steel and aluminum derivatives. If you can sort of just clarify on that as well, whether it's applicable on trucks or not.
Gunjan, what we know so far is that it's applicable for passenger cars. We don't know anything more than that because no details have come out. I think we should wait and watch. Besides that, please remember that our exports are across many sectors, many geographies, and many products. We just have to wait and watch. We don't have any clarity on this yet.
Okay, got it. Beyond the tariffs, I think generally the sense on the class eight cycle, I mean, of course, there is a bit of pessimism in the recent truck orders that we've seen, but it's also a function of where the tariff uncertainty is. If you were to sort of give us a sense on how should we think about the class eight cycle, factoring that the EP emissions are also in a little bit of limbo at the moment. This year a dip, and next year comes back. How do we think about that?
Again, Gunjan, it's very difficult to answer this question with the frame of the tariff uncertainty in place. Typically, if you had a euro norm changing or emission norm changing, you have a pre-buy because there is a cost increase. If there is no cost increase coming, you should have two normal years rather than one pre-buy and one low year. We don't know. Typically, that's what we should expect, is two normal years. Am I right?
Yeah.
I think that everybody right now is waiting on the sidelines with the whole tariff issue being such a question mark. I think that's where we stand.
Okay. Last question, a little bit of your thoughts on this electronics and servers that we are doing. There were two sort of announcements you had made that we'll be manufacturing servers. Can you talk a little bit about this? What's the thought process? Is this the new revenue line item that we should be thinking for future?
No, I think that electronics are going to be a very large part of the overall industrial landscape. If you look at automotive also, the share of electronics in the automobile as a percentage of total vehicle value is dramatically increasing. If you want to be in electronics, you can't only be in one or two areas. You need to build scale. You need to build supply chain capability. You need to build. I think we're going to do that in multiple areas. The Indian government wants to create Indian electronics players in these areas where imports are not wanted to be used. I think there is an opportunity, and that's what we're pursuing.
Okay, got it. I joined that with you. Thank you.
Thank you.
Thank you. Participants, please restrict yourselves to two questions. If you have any more questions, kindly return to the queue. The next question comes from the line of Kapil Singh from Nomura. Please go ahead.
Yeah, good afternoon, sir. Just for clarification on the tariff, the non-passenger car revenues, will there be a reciprocal tariff that will be there on those? How are the customers reacting to this? Are they going slow and waiting for the tariff situation to settle? Are you seeing some rundown schedules because of that?
I would say that we're in a holding pattern. Nobody knows anything that is going on right now. Okay? We are all waiting for some amount of clarity till the smoke settles. I don't think anybody can answer these questions today. I think we just have to wait and watch.
Sir, for your U.S. operations, there was a tariff on steel and aluminum also that has come in U.S.. .Could you just help us understand what is the impact there? Because we see that, actually, that operation has turned profitable this quarter.
Yeah, we are producing steel and aluminum components in the U.S.. We buy our steel locally, and we also produce our—I mean, we produce our alloyed aluminum in-house by buying aluminum ingots. I think that in general, we do not have an impact, and whatever impact we have will be passed on.
Okay, so steel and aluminum—
That is raw material. It is on raw material.
If at all, it is. Has the cost gone up there, and have you been able to pass it on?
Yes. For cost has not gone up here. Raw material is passed through for us. The way our agreements stand is automatic pass-through.
Understood. Sir, just lastly, on the defense side, what was the revenue for the full year on defense? Ganji, talk of 15%-20% growth if you could give some color, like what will be driving that? When will the ATAG's revenue start reflecting?
Yes, in the defense players, we're talking about INR 1,500 crore. We're talking about INR 1,500 crore on our consolidated basis, INR 1,550 crore.
Does that answer your question, Kapil?
No, actually, partly, I had also asked what will drive the 15-20% growth this year with sidelines?
You know, we've gone through a lot of new orders, including the ATAG's order. That will also start delivering by the end of this year. It is a bigger part of it. Plus, we have many new programs and orders that we have in the fire, and it could fructify by that.
Thank you, sir, and wishing you all the best.
Thank you.
The next question comes from the line of Sameen Irani from JP Morgan. Please go ahead.
Yes, hi. Thanks for the opportunity. Just on tariffs, if you allow one more question, last week, or I think 10 days back, there was some offset which was allowed to some of the U.S. OEMs who are importing components. So in your opinion, does that offset reduce the impact of tariffs, at least for auto components, also in the near term, or that is not something that you think is substantial?
Yeah, the offset is basically they've given us a two-year plan that all the OEMs, they have 25% tariff rate, and in the first year, they can get a refund of 15% from the government. The second year, they will get a refund of 10%, and in the third year, it will be reviewed depending on what happens. That is what the announcement is.
Okay. Okay. Okay. Secondly, on this server and electronics team, this will be utilizing your KTPL investment that you've done in the capacity?
Yes. We set up electronics, SMP lines, and electronics manufacturing, which will be used.
Any broad timeline by when we could start seeing this?
Second half.
Second half of this financial year.
Yeah.
Okay. Okay. Thank you. I'll come back to you.
Thank you. The next question comes from the line of Arjun Khanna from Kotak Mutual Funds. Please go ahead.
Thank you for taking my question. The first question is on U.S. manufacturing operations. Now that the tariffs are in place, etc., how do you see the further scale-up of the business? You've already seen good growth on a year-on-year, quarter-on-quarter level for US manufacturing operations. What is our outlook for FY 2026?
One comment is we've been growing in the U.S. from an audible position and spread irrespective of all the status. Whatever happens right now, it will only help us in accelerating it. Currently, we can't give you numbers in that regard, obviously, but we see a very strong order book, and we are also ramping up our existing capacities, both for steel and aluminum. The outlook is good. Now the focus is for us to make it happen. Obviously, we continue to look for more opportunities.
If we look at a turnover of roughly INR 3,200 crore, what we did for this quarter, what would be the utilization rates?
In the U.S., our utilization rate would be about 60-65%.
Peak would be around 80%, sir?
No. This is phase one of aluminum plus the steel. Phase two is zero right now. Phase two is just completing, that is getting completed. Phase two will allow us to double the output.
Okay.
So.
Very helpful, sir. In terms of margins, we had indicated.
Sorry to interrupt, Arjun, those were your two questions. Would you please reshare?
This was just one question. Can I go to the second one?
Okay, go ahead.
Sure. Just on the aerospace bit, we have mentioned in our questionnaire also in terms of UI 27, where our new facilities come in. This quarter also, we did see good growth when compared to on an annualized basis. If you could just talk about which are these components, are they impacted by tariffs going into the U.S., where are we sending this?
Aerospace market is largely Europe.
Okay.
And non-USA.
Okay.
Obviously, the U.S. is a big market, and eventually, the U.S. will also have to be a big market for us. Currently, our growth is coming from Europe and non-U.S. markets.
This quarter's growth, which we have seen, is it sustainable, or is this?
We will continue growing. Our annual numbers will continue growing. Every year, you will see growth. Do not look at it on a quarter-to-quarter basis.
Okay. Sure. Thank you, and wishing you all the best.
Thank you. The next question comes from the line of Arvind Sharma from Seti Dhanyan. Please go ahead.
Yeah, hi. Good afternoon, sir. Thank you for taking my question. This ATAG's order, the INR 3,417 crore order, this is the Indian ATAG's order, I believe. Is that okay? Is it the whole order, sir, or could we see further increase in this number?
We have phase one order, which is 307 guns. Obviously, we have 50%. Overall, India needs more than 1,500, close to 2,000 artillery guns.
Okay. So it's 307 guns are the INR 3,417 crores, and there could be further increase there?
Yes.
When you?
Different kinds of guns and lots of them.
Okay. Sir, when should we see the revenue for this order in the numbers for the company?
I would say Q4.
Q4 this fiscal year?
Yeah.
All right. It will be spread over how many years or quarters? Could you share that?
Two years. For this order, two years.
Two years beginning for Q4 FY27.
Yeah.
All right. Thank you so much for this. That's all from my side.
Thank you.
Thank you. The next question comes from the line of Ruchita Kagde from IWELT Management. Please go ahead.
Hello, sir. A very good afternoon. Sir, my question will be on the Kalyani Strategic Systems Limited. In that, how much was the domestic revenue and how much came from exports?
In Kalyani Strategic Systems, most of the revenue was exports. One clarification, the INR 1,567 crore number, 40% for defense, that is only for Kalyani Strategic Systems. On a consolidated basis, it is about INR 70 million crores. It is applied components and other things to other players as well in the field, which go from us.
Understood. Sir, this Kalyani Strategic number that you've said that most of it came from exports, last year, how was this ratio? Like domestic to export?
Last year also, it was exports, and this year also, it was exports too. Because the domestic orders are yet to supply. Domestic orders are yet to start.
Okay. Okay. In the GS Auto, sir, during the quarter, what was the revenue, if you could just tell?
I think of INR 200 crore.
INR 200 crores. The margins?
About 50-60%.
Understood. Understood. Yes. Thank you so much.
Thank you. The next question comes from the line of Lakshmi Narayan from Tunga Investments. Please go ahead.
Thank you. Just want to understand, what has been the tonnage growth in India, the commercial vehicle and the passenger car? Because the revenue growth.
Stop looking at target now because we're not only a forging company. I think you have to look beyond that and look at revenue. And we're not trading with our salary anymore.
Sorry. You had mentioned that you had got some new, you opened certain new products or also clients or applications. Can you just talk a bit about that in terms of commercial vehicles and industrial and this for domestic? Some color on that, that will be helpful.
I understand. I'm sorry, you're very unclear.
I mean, you have actually won certain new orders, or you've actually gone deepened some relationships in the domestic market? I just want to understand a bit more about it if you can share some details.
No, I don't know one order. What do you want to know more? We have received multi-order from several customers which are coming to roughly about almost INR 7,000 crore, of which INR 5,000 crore are for defense and INR 2,000 crore are for our component businesses.
We get a lot of they're spread over all the sectors in India. We don't disclose the specific orders for confidentiality agreements with customers.
Is your outlook for India, domestic business?
Overall, we're good.
Because we are expanding in all segments.
Okay. Okay. Thank you, sir.
Thank you. The next question comes from the line of Kapil Singh from Nomura. Please go ahead.
Yes. I have just one question. Under CAPEX, if you could give an indication for next year for panel and control, what kind of numbers to expect?
I think roughly both put together would be in the region of INR 500 crore next year.
Okay. All right. That's it from my side.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Amit Kalyani to give us his closing remarks.
Ladies and gentlemen, thank you for your time, interest, and questions. I'm sorry we don't have any more answers than we could answer today because things are in a flux. I think the Indian government and Indian manufacturing are cooperating to make sure that we take advantage and are in a good situation even with the U.S. tariff situation. India is a strong country with very good manufacturing capability, and we think that we will see light at the end of this tunnel thanks to the leadership. Let's say the way the Indian government is handling the situation on tariff, I think there should be a good solution in place for us sooner than later, and will provide clarity on this and allow us to all manage to grow our businesses going forward.
Thank you very much, and I wish you all a healthy and a safe end of the week and a weekend in these rather difficult times. Thank you.
Thank you, sir. Ladies and gentlemen, on behalf of Bharat Forge, that concludes this conference. You may now disconnect your lines.