Bharat Forge: revenue up 18.7%, but EBITDA down 44.7% – margin halved

25 августа Bharat Forge раскрыла результаты за первый квартал 2026 финансового года. Выручка выросла на 18,7% год к году, до 46,4 млрд INR, но EBITDA упала на 44,7%, до 7,1 млрд INR, а чистая прибыль стала отрицательной – минус 0,9 млрд INR. Акции выглядят непривлекательно: при текущей цене мультипликатор EV/EBITDA составляет 34,0 против среднего 26,6 за три года, а рентабельность собственного капитала отрицательная.

Key takeaways

— Revenue grows 18.7%, but EBITDA falls 44.7% – margin halves

— Net profit turns negative at 0.9 billion INR due to one-offs

— Debt rises 6.0 billion INR in the quarter to 60.3 billion INR

— Dividend yield 0.43% – below the key rate

— Valuation: EV/EBITDA 34.0 vs 26.6 three-year average

Attractiveness

Key figures, INR bn

Revenue grows 18.7%, but EBITDA falls 44.7% – margin halves

In the first quarter of fiscal 2026, Bharat Forge's revenue reached 46.4 billion INR, up 18.7% year-on-year. This continues the acceleration: the previous quarter saw 17.5% growth, and the one before that 25.0%.

However, EBITDA for the quarter fell 44.7% year-on-year to 7.1 billion INR. The EBITDA margin contracted from 18.4% to 8.6%. The reason for this divergence is not disclosed in the report, but it is clear that operating expenses grew faster than revenue.

Net profit turns negative at 0.9 billion INR due to one-offs

Net profit for the first quarter of 2026 was minus 0.9 billion INR versus plus 2.8 billion INR a year earlier. This is a decline of 131.6% year-on-year. Negative net profit despite positive operating profit (4.5 billion INR) points to one-off losses, likely from currency fluctuations or write-downs.

Over the last twelve months, net profit was 7.1 billion INR, which at the current market cap of 946.4 billion INR gives a P/E of 134.0. This is an extremely high valuation, especially given the negative return on equity in the reported quarter.

Debt rises 6.0 billion INR in the quarter to 60.3 billion INR

Net debt at the end of the first quarter of 2026 stood at 60.3 billion INR, up 6.0 billion INR from the previous reporting date. Over the last twelve months, debt increased by 3.3 billion INR. The ratio of net debt to EBITDA for the last twelve months is 2.03.

Rising debt amid falling profits is a worrying signal. Operating cash flow over the last twelve months was 14.9 billion INR, covering only part of capital expenditures, which are not disclosed in the report.

Dividend yield 0.43% – below the key rate

Over the last twelve months, Bharat Forge paid dividends yielding 0.43% at the current price. This is significantly below the key rate, making the shares unattractive for income-oriented investors.

With negative net profit in the reported quarter and rising debt, dividend payments this year are questionable. If the company maintains its payout policy based on earnings, dividends could be cut.

Valuation: EV/EBITDA 34.0 vs 26.6 three-year average

The current EV/EBITDA multiple stands at 34.0, 28% above the three-year average of 26.6. The shares trade at a premium to their own history despite deteriorating operating performance.

According to the portal's model, the upside is +3% to the current price. This implies that fundamental value is close to market value, but given the falling margin and high debt, the growth potential is limited.

Valuation on the latest reported figures

Bottom line

Bharat Forge shows strong revenue growth, but this does not convert into profit: EBITDA halved, net profit is negative. Debt is rising, dividend yield is minimal. With a valuation above its own history and limited upside on the portal's model, the shares look unattractive. A change in verdict would require margin recovery and lower debt.