Bharat Forge Shares Jump After Securing ₹6,900 Crore Defence Contract for Advanced Artillery Gun Systems
Introduction
Bharat Forge Limited, one of India’s leading forging and defense technology companies, witnessed a surge in its stock price after signing a major ₹6,900 crore contract with the Ministry of Defence (MoD). The deal aims to modernize India’s artillery by procuring 155mm/52 Calibre Advanced Towed Artillery Gun Systems (ATAGS) and high-mobility 6×6 gun towing vehicles. This contract is expected to significantly enhance the country’s self-reliance in defense production under the ‘Make-in-India’ initiative.
Stock Price Movement
Bharat Forge’s stock saw an increase of up to 2%, trading at ₹1,187.65 per share, compared to its previous closing price of ₹1,182.25. The company’s market capitalization currently stands at ₹56,780.20 crore.
The positive movement comes as investors react to the company’s growing footprint in the defense sector, which is poised for further expansion following this landmark contract.
Why Bharat Forge Shares are Rising?
The rise in Bharat Forge’s share price can be attributed to multiple factors:
- Major Defence Contract:
The company, along with Tata Advanced Systems Limited, has secured a ₹6,900 crore contract with the MoD. This involves the procurement of 155mm/52 Calibre ATAGS and high-mobility 6×6 gun towing vehicles. - Indian Army’s Modernization Plan:
The contract is part of a broader strategy to replace outdated artillery guns with state-of-the-art ATAGS, enhancing operational capability, precision, and long-range firepower. - Boost to the Domestic Defence Industry:
The project will significantly contribute to India’s defense manufacturing ecosystem, creating jobs and boosting local production. This aligns with the government’s push for “Atmanirbhar Bharat” (self-reliant India) in defense. - Growing Order Book:
The company’s defense order book stands at ₹5,700 crore, excluding potential future orders.
Bharat Forge’s Financial Performance
Despite securing this major contract, Bharat Forge reported a dip in revenue and profit in Q3 FY25. However, its defense business remains a bright spot.
| Financial Metric | Q3 FY24 | Q3 FY25 | YoY Change |
|---|---|---|---|
| Revenue | ₹3,866 Cr | ₹3,476 Cr | -10% |
| Net Profit | ₹254 Cr | ₹213 Cr | -16% |
| Defence Revenue (Q3) | ₹337 Cr | – | 49% YoY growth |
| Defence Revenue (9M) | ₹1,488 Cr | – | 49% YoY growth |
The company’s overall financials show a temporary dip, but its long-term outlook remains strong due to rising defense and aerospace revenue.
New Developments & Future Outlook
Bharat Forge is actively expanding into new verticals such as aerospace and high-precision forgings.
- Casting and Aerospace Investments
- The company is investing in machining for landing gear and precision forgings for jet engines.
- Ferrous casting revenue is expected to reach ₹1,000 crore annually in 6-8 quarters, with a projected 250-300 basis point margin expansion in two years.
- Defense and Aerospace Growth
- The ATAGS contract will start execution in 3-4 months, with deliveries in 15-18 months.
- Bharat Forge expects faster revenue realization from export contracts in the defense sector.
- Aerospace revenue, currently at ₹50-60 crore per quarter, is projected to exceed ₹100 crore next year.
- Market Outlook
- The domestic commercial vehicle (CV) market is expected to see slight improvement in Q4 FY25.
- North America’s CV market is expected to grow by 10% in H2 FY26, while Europe remains uncertain due to political shifts.
Bharat Forge: Key Financial Ratios
| Metric | Value |
|---|---|
| Market Cap | ₹57,058 Cr. |
| Stock Price | ₹1,193 |
| 52-Week High/Low | ₹1,826 / ₹1,002 |
| Stock P/E | 60.0 |
| Book Value | ₹152 |
| Dividend Yield | 0.78% |
| ROCE (Return on Capital Employed) | 12.9% |
| ROE (Return on Equity) | 12.7% |
| Debt-to-Equity Ratio | 1.06 |
| Pledged Percentage | 0.00% |
| Industry P/E | 28.1 |
| Graham Number | ₹256 |
| Intrinsic Value | ₹315 |
| RSI (Relative Strength Index) | 61.3 |
| EPS (Earnings Per Share) | ₹19.1 |
| PEG Ratio | -21.0 |
| DMA 200 (200-Day Moving Average) | ₹1,282 |
| Free Cash Flow (3Yrs) | ₹29.9 Cr. |
| Free Cash Flow (5Yrs) | ₹724 Cr. |
| Debt | ₹7,740 Cr. |
Conclusion
Bharat Forge’s landmark deal with the Indian defense ministry is a strong indicator of its growing influence in the defense sector. While its overall financials showed a decline in Q3 FY25, the defense segment’s rapid growth and increasing order book present a positive long-term outlook.
With the Indian government’s continued push for self-reliance in defense, Bharat Forge stands to benefit significantly, making it a key stock to watch in the coming years.
Frequently Asked Questions (FAQs)
1. Why did Bharat Forge’s stock rise recently?
Bharat Forge’s stock rose due to the signing of a ₹6,900 crore defense contract with the Ministry of Defence for ATAGS and gun towing vehicles.
2. What is the significance of the ₹6,900 crore defense contract?
The contract will modernize the Indian Army’s artillery, replace older guns, and enhance India’s self-reliance in defense manufacturing.
3. How has Bharat Forge performed financially in recent quarters?
In Q3 FY25, revenue declined by 10% YoY to ₹3,476 crore, and net profit fell by 16% to ₹213 crore. However, the defense segment showed 49% YoY growth.
4. What is the outlook for Bharat Forge’s defense and aerospace business?
- ATAGS deliveries will begin in 15-18 months.
- Aerospace revenue is expected to exceed ₹100 crore per quarter next year.
- The defense order book is strong at ₹5,700 crore.
5. What are Bharat Forge’s key financial ratios?
The stock P/E ratio is 60.0, ROCE is 12.9%, ROE is 12.7%, and debt-to-equity is 1.06. The company has zero pledged shares, indicating strong financial stability.
6. How does Bharat Forge’s future look in the stock market?
With a strong defense order book, rising aerospace revenue, and government support for domestic manufacturing, Bharat Forge has a promising long-term growth trajectory.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.