Bharat Forge Q1 review: Near-term outlook weak, stock slips 3%

Bharat Forge shares slipped over 3% in early deals on Thursday even as the auto parts maker reported a 61% rise in Q1 net profit. Citi has a sell rating on Bharat Forge. It has assigned a target price of Rs 870. The brokerage said Q1 performance was slightly above expectations on revenue beat and lower tax.

However, the brokerage believes US tariff uncertainty is expected to weigh on Q2 as well

"Valuations at 42x/35x FY26/27 P/E leave little room for error," added Citi.

Jefferies maintained an underperform stance on the stock with a price target of Rs 950.

Q1 was tough for the firm as exports outlook worsened by weak macro and rising US-India tariffs. However, ramp-up of large Indian guns order to begin from Q4, which is a positive trigger, said Jefferies.

FY26–28E EPS estimates are 9–14% below Street consensus, it added.

In its management commentary, the firm said exports to the US were 200 million amounting to 10% of the company's revenue.

It expects political resolution to tariff issues “sooner than later". Q1 performance was impacted by weakness in Europe, US, and sector-specific slowdowns.

Meanwhile, Bharat Forge stock slipped 3.1% to Rs 1103 on BSE. Market cap of the firm stood at Rs 53,082 crore. Total 0.27 lakh shares of the firm changed hands amounting to a turnover of Rs 2.99 crore.

The stock fell to a 52-week low of Rs 919.10 on February 28, 2025 and rose to a 52 week high of Rs 1654.10 on August 9, 2024.

Bharat Forge logged a 62.60% rise in consolidated net profit to Rs 283.87 crore in Q1 FY25 against Rs 174.58 crore posted in Q1 of FY25.

However, revenue from operations fell 4.80% YoY to Rs 3,908.75 crore in the quarter ended 30 June 2025. Profit before tax (PBT) stood at Rs 410.99 crore in Q1 FY26, rising 37.20% from Rs 299.54 crore reported in the corresponding period a year ago.

Motilal Oswal sees a 7% downside in the stock to Rs 1,060 in a year. It has a neutral stance on stock.

"Considering the weak 1Q performance and a weak outlook for most of its key segments, we have lowered our FY26/FY27 EPS estimates by 12%/15%. Management has noted that FY26 is likely to be challenging amid tariff-led uncertainties and changes in emission regulation in North America. Given these factors, the stock at 44x/34.4x FY26E/FY27E consolidated EPS appears fairly valued," said MOSL.

Brokerage Nuvama maintained its hold stance after Q1 earnings.

Q1FY26 standalone revenue fell 10% YoY to Rs 2100 crore, below estimate on the back of lower-than-expected export revenue.

EBITDA fell 13% to Rs 570 crore, below estimate on the back of a revenue miss and tariff impact of Rs 14 crore.

The brokerage expressed concerns on the business outlook of the firm.

"Core segments such as commercial vehicles and global construction equipment/tractors are likely to be weak, limiting standalone revenue/EBITDA CAGR at 7%/6% over FY25–28E. Moreover, we reckon subsidiaries shall stay in losses. Retain ‘HOLD’ with a TP of INR1,280 (earlier INR1,230) based on 35x/15x Sep-27E (earlier Mar-27E) EV/EBITDA for defence/remaining businesses," said Nuvama.