A key defence play in focus – Motilal Oswal cut Bharat Forge rating to Neutral, arguing that the company is getting into a period where several pressures line up at once. The brokerage said the next few quarters may not move as smoothly, especially with export demand still soft and overseas units struggling to lift margins. Motilal Oswal cut its rating to Neutral and set a target price of Rs 1,290. The target implies a downside of about 5.7% from the current level,
Motilal Oswal on Bharat Forge: Rising caution
Motilal Oswal said the company’s key export engine, the US Class-8 truck market, remains subdued. Demand has not picked up the way manufacturers had hoped, and the brokerage does not expect a sustained recovery until the second half of 2026. The report noted that without a broader trade arrangement and stronger fleet orders, export visibility stays limited.
Motilal Oswal also pointed out that Bharat Forge continues to carry the drag from its European units. Energy and labour costs remain high, and the older plant setups make it harder to absorb these costs quickly. The management has been reviewing options, including moving some production to India, but the brokerage said investors will have to wait until the March quarter of FY26 for real clarity.
Motilal Oswal on Bharat Forge: Near-term strain
The domestic commercial vehicle market offered some comfort during the festival period, especially in light and small trucks. But the base remains high and the outlook for the last quarter of the year looks mixed. Bharat Forge itself has sounded cautious about whether demand can sustain. Motilal Oswal believes this slows the path to volume recovery because both domestic and export engines are not firing together.
This strain extends to the aluminium-forging vertical as well. K-Drive Mobility, acquired to widen the company’s product range, came with a legacy order that carries very thin margins. The unit also has a five-year non-compete in North America, which means the company cannot immediately chase one of the biggest markets for aluminium components. The brokerage said that while performance will improve eventually, it will not solve the next-quarter problem.
Motilal Oswal on Bharat Forge: Limited headroom
The brokerage said the company’s defence order book, shown in different places as around Rs 11,400 crore and Rs 9,500 crore, remains a strength but will take time to convert into steady revenue. The large ATAGS order, for example, is expected to move into production only by FY27. The carbine contract will add scale but again needs ramp-up time. The story is moving, but slowly.
Aerospace continues to grow from a small base. Revenue is expected to rise to more than Rs 350 crore in FY26 from around Rs 250 crore in FY25. It is a promising line, but still not large enough to offset weakness in trucks and Europe.
Motilal Oswal on Bharat Forge: Muted outlook
According to the brokerage, consolidated revenue is estimated to reach Rs 16,360 crore in FY26 from about Rs 14,530 crore the previous year, while EBITDA is projected to climb to Rs 1,760 crore from roughly Rs 1,600 crore. Profit is expected to rise to Rs 1,210 crore from around Rs 1,030 crore. The growth is there, but it is not dramatic and not enough to change the near-term picture.
The margin story remains uneven. While India operations hold steady, Europe pulls down overall profitability. The brokerage said the eventual restructuring could help, but until specific decisions are taken, the market will treat the unit as a source of uncertainty.
Motilal Oswal on Bharat Forge: Pressure building
The stock trades at around 54 times FY26 estimated earnings. Motilal Oswal said this valuation assumes fairly smooth execution in defence, aerospace and the foundry business. But the actual path is unlikely to be smooth because too many moving pieces need to fall into place at the same time. Export demand has to stabilise. European restructuring has to be finalised. K-Drive has to clear its legacy order. ATAGS has to start production on schedule. All of these matter, and any lag will hit the numbers.