Bharat Forge Ltd – Market leader in components of PVs and CVs

Bharat Forge Ltd is a market leader in domestic chassis and engine component segment for commercial vehicles.

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(A) About Bharat Forge Ltd

Bharat Forge Ltd - logo

Bharat Forge Ltd founded by Nilkanthrao A Kalyani in Jun,1961. It was the first company promoted by the Kalyani Group. It is Pune based Indian multinational and is a global provider of high performance & critical components and solutions to various sectors include automotive, railways, power, defense, construction & mining, aerospace, marine and also in Oil & Gas, where it supplies its parts to OEM and government.

The company operates in the Industrial and manufacturing sector where market dominance comes from Scale, distribution reach, innovation capabilities and Clientele. On the manufacturing front, the company has 12 large manufacturing facilities across the world including the US, Germany, Sweden, France and also in India.

In past 10 years from Mar-13 to Mar-22 company have given a return of 328% on its stock price. While its sales grew from Rs 5,167 Cr to Rs 10,461 Cr.

(B) Journey

(C) Board Members of Bharat Forge Ltd

(i) Mr. B.N Kalyani - Chairman

Mr. B.N Kalyani served as the Chairman and Managing Director of the company. He joined the company in 1972. Moreover, He has 49 years of experience.

He has completed his BE (Hons.) in Mechanical Engineering from BITS Pilani and later get his MS from MIT University.

Mr. B.N Kalyani has also received the Padma Bhushan award for contributions to Trade and Industry.

In FY22, Mr. B.N Kalyani received a remuneration of Rs 17.86 Crore which is 0.17% of sales and 1.60% of Net profit.

(ii) Mr. G.K Agarwal - Deputy Managing Director

Mr. G.K Agarwal is at the position of the Deputy Managing Director of the company.

Prior to this Gopal Krishan Agarwal was previously associated with 3 companies, Bf Utilities Limited, Ge Power Systems India Private Limited and also in Kalyani Alstom Power Limited. He also has 48 years of experience.

In FY22, Mr. G.K Agarwal received a remuneration of Rs 4.57 Crore which is 0.04% of sales and 0.41% of Net profit.

(iii) Mr. A.B Kalyani - Deputy Managing Director

Mr. Amit Kalyani is the Deputy Managing Director at Bharat Forge Limited and son of B.N Kalyani.

Mr. Kalyani has been working with Bharat Forge since 1999, starting his career with manufacturing and moving on to IT and Finance and has been the group’s Executive Director since May 2004.

Furthermore, holds a BE degree in Mechanical Engineering from Bucknell University, Pennsylvania, U.S.A. He is also a Harvard Business School OPM graduate and a YPO member.

In FY22, Mr. A.B Kalyani received a remuneration of Rs 4.39 Crore which is 0.04% of sales and 0.39% of Net Profit.

(iv) Mr. B P Kalyani - Executive Director

Mr. B P Kalyani is the Executive Director at Bharat Forge Limited.

He is 59 years old with having an experience of 40 years. He has been working with the company since past 40 years.

Furthermore, he holds a B.E.(P) degree and also a MBA and MS degree. Company has reappointed him as an executive director on 23 May, 2021 for a period of 5 years.

In FY22, Mr. B.P Kalyani received a remuneration of Rs 3.71 Crore which is 0.03% of sales and 0.33% of Net profit.

(v) Mr. S E Tandale - Executive Director

Mr. S E Tandale is the Executive Director at Bharat Forge Limited.

He has been reappointed as an executive director on 23 May, 2021 for a period of 5 years. Mr. Tandale is 53 years old and having an experience of 31 years. He has been working with the company from 1991.

Furthermore, He holds a degree in Mechanical.

In FY22, Mr. S.E Tandale received a remuneration of Rs 4.19 Crore which is 0.04% of sales and 0.37% of Net profit.

(vi) Mr. K M Saletore - Executive Director

Mr. K M Saletore is the Executive Director and CFO of the company, with having 33 years of experience in it. Prior to this he was working with Tata Realty & Infrastructure Ltd.

He is a C.A and holds a B.Com. degree and also a masters degree from Indian Institute of Management Bangalore.

In FY22, Mr. K.M Saletore received a remuneration of Rs 3.22 Crore which is 0.03% of sales and 0.29% of Net Profit.

(D) Shareholding Pattern of Bharat Forge Ltd

Bharat Forge Ltd - Shareholding Pattern

Promoters are holding 45% out of which 7.12% of shares are pledged.

Bharat Forge Ltd - Shareholding promoters
Bharat Forge Ltd - Institutions shareholding

Other Directorships Held

Bharat Forge Ltd - Directorship held

(E) Business Segments of Bharat Forge Ltd

Bharat Forge ltd - Segments

(i) Automobile

Bharat Forge Ltd - automobile components

It is India's largest auto component exporter and among world's leading technology-driven powertrain and chassis components manufacturer.

Further, company is market leader in domestic chassis and engine component segment for Commercial & Passenger vehicles.

(ii) Industrial

Bharat Forge Ltd - industrial components

In the industrial sectors company address (Construction & Mining, PSU including Defense & Power,
engineering sector) have a significant linkage to government spending on infrastructure and also in defense.

Where it manufacture components for thermal, wind, hydro and also nuclear application along with sub-sea and deep-sea applications across geographies.

Further, in defense it has diverse range of products with unique capabilities such as Artillery Guns and Armored Vehicles.

(F) Revenue Segmentation of Bharat Forge Ltd

(i) Segment wise Revenue breakup - Domestic

Bharat Forge Ltd - Revenue Breakup

(ii) Segment wise Revenue breakup - Export

Bharat Forge Ltd - Segment wise revenue

Company automobile segment contribute a large portion of its revenue, in which it is also a market leader in the domestic chassis nd engine component segment for CVs.

To de-risk its business from cyclicality of automobile industry. It is also increasing its focus on industrial business mainly into defense and e-mobility where it plans to manufacture defense equipment's like artillery guns and armored vehicles and for EVs it plan to manufacture its subsystems and battery management systems.

(iii) Geography wise revenue breakup

Bharat Forge Ltd - Geography wise revenue breakup

Large portion of company's revenue comes from export in which US is the main contributor, it contributes 40.21%, Europe contributes 17.02% meanwhile, 1.56% comes from other parts of the world.

Meanwhile, India has a share of 41.22% of overall revenue.

(G) Manufacturing Facilities and Capacities

Bharat Forge Ltd - Manufacturing facilities

Meanwhile, company has 6 manufacturing plants in India, 2 manufacturing plants in America along with 4 manufacturing plants in Europe.

Manufacturing Capacities

Bharat Forge Ltd - Manufacturing capacities

It has a total Steel Forging Capacity of 6,43,750 MTPA and Aluminum Forging capacity of 42,400 MTPA.

(H) Cost Structure

(i) Cost Structure

Bharat Forge Ltd - Cost Structure as % of Net Sales

(I) Competitors

Bharat Forge Ltd - Competition

(J) Financials Parameters

(i) Term of Trade

Bharat Forge - Terms of trade

Moreover, it's ToT reduce from 2012 to 2022 which tells that the company is increasing it's bargaining power.

(ii) Du Pont Analysis

Bharat Forge ltd - Du Pont Analysis

Company has reduced its debt from FY21 to FY22 which improves its leverage from 2.31 to 2.21. Its PATM% in FY21 is negative as company has given a loss in FY21 due to Covid-19 second wave and supply chain problem but improved in FY22 to 10.61%.

(iii) Financial Parameters

Bharat Forge Ltd - Financial trend

Operating revenue decrease in FY20-FY21 due to Covid-19 and supply chain problem but recover a growth of 65% from FY21 to FY22.

Similarly company saw an increase in its profit from Rs -96.99 Cr in FY21 to Rs 1,110.08 Cr in FY22.

Further company's ROCE and ROE increase while it's debt to equity reduced.

Bharat Forge Ltd - performance of last 4 quarters

Company's revenue increase by 49.24% from Rs 2,394.69 Cr in FY21 to Rs 3,573.09 Cr in FY22

(K) Management Discussion & Concall highlights


  • Production of passenger vehicles and medium & heavy commercial vehicles in India have declined by 47% and 24% respectively during FY18 to FY21.
  • Additionally, company is shifting their products portfolio to light-weight material. Company have identify renewable energy as a new sector to focus on.
  • Demand for Class 8 trucks in US is also good.
  • In addition trials of ATAGS program has been successfully completed and company might start getting the orders from FY23.
  • Company has also received a contract of Rs 177.95 Crore to supply M4 vehicles to Indian Army.

Concall Highlights - Q4 FY22

  • Company has won contract of over Rs 1,000 Crore of new orders for Bharat Forge India. For both domestic and export markets.
  • Its Artillery Guns has completed all trials and passed all the tests.
  • In addition the company has won a contract of $150 million of order for steel and aluminum forging for US operations which will be made in US for US customer.
  • Company has crossed about Rs 10,000 Cr in revenue.
  • Meanwhile, the supply of trucks in America could effect due to the shortage of semiconductor chips.
  • Further, in EVs its plan is to focus on subsystems and entire BMS (Battery Management Systems) for low and high voltage utility.
  • Additionally, revenue from oil & gas business remain stable as the life cycle of it's product increase.

Expansion plan

  • Company also plan to take the aluminum forging business from around EUR 60 million in CY20 to around EUR 200 million in the coming 4-5 years.
  • Meanwhile, company has a ATAGS capacity of about 100 guns which they will increase it to 200 by next year.
  • Further, it has planned Greenfield expansion at Khed, Pune to boost capacities in defense and e-mobility.


Company is focusing on increasing its share in defense segment where company might get a boost as government is supporting "Atmanirbhar Bharat" where it want to maximize inhouse production of defense equipment's, meanwhile, in year 2022-23 India has allotted $ 70.6 billion to Ministry of Defense.

Cases on company's management

  • On October,2015 Baba Kalyani niece filed a case against him claim that one-ninth of the estate as her share.
  • Chief Accountant of Techno Forge kill himself and leave a note blaming Amit Kalyani. He borrowed money from Amit Kalyani and didn't able to repay.

(L) Strengths & Weaknesses


(i) Leadership position in CVs engine and chassis components segment; strong customer base in domestic nd international markets facilitated by strategic acquisitions :

BFL is the market leader in the domestic chassis and engine component segments for CVs. It is the main supplier to leading domestic CVs OEMs. Along with its subsidiaries, the company also supplies forged components to all major global CV OEMs. Over the years, it has added new customers and geographies to diversify its business profile and clientele.

(ii) Diversified product profile and dual shore capabilities :

Bharat Forge strong market position reflects its large scale of operations. Meanwhile its research and development infrastructure allows the company to enjoy the status of a complete solution provider right from the conceptualization and designing stage to the manufacturing and validation stage.

(iii) Diversification through investments in industrial components business :

To de-risk its business model from the cyclicality of the automobile industry, Bharat Forge has also been increasingly focusing on its industrial business with a varied product mix including forged and machined products. Furthermore the company has been supplying to industrial segments for applications in oil and gas, wind energy and a range of heavy engineering applications, which accounted for ~45% of its standalone turnover in 9M FY2022.


(i) High working capital intensity and moderately leveraged capital structure :

Owing to high exports, BFL’s receivable cycle is stretched, which resulted in high working capital intensity. While the inventory level has comparatively been higher in the recent past, the same is expected to reduce gradually as operational normalcy resumes across industries and geographies.

To improve its cash flows, the company discounts invoices of its overseas customers, as discounting rate is substantially lower than the domestic funding rate.

(ii) Challenging operating environment across geographies; though manpower rationalization efforts have helped in improving break-even levels :

With its lean cost structure and superior product mix, BFL has been able to sustain healthy operating margin, despite a decline in volume, amid the challenging demand environment in its end-user industries in the recent past. Most of the overseas subsidiaries of BFL have also demonstrated improvement in business operations on back of visible recovery in demand across key business verticals.

(iii) Despite diversification plans, exposure to highly cyclical CV segment both in India and international markets remains high :

BFL’s revenue can be broadly divided into CV (~42% of standalone revenue in 9M FY2022), PV (~14%) and industrial segment (~44%). It also aims to diversify its business portfolio through product diversification and focusing on the industrial business segment. Further, the auto component industry remains vulnerable to pricing pressures from the large OEMs.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications.

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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