Defence, aerospace to drive Bharat Forge; CV outlook unclear: Motilal Oswal

Analysts at Motilal Oswal expects Bharat Forge (BHFC) to ride a multi-year expansion cycle led by its fast-growing defence and aerospace businesses, even as the brokerage remains cautious on the stock’s valuations and lingering weaknesses in commercial vehicle (CV) markets and overseas operations. 

 

In its latest note after meeting the company’s management, the brokerage highlighted that BHFC’s transition from a traditional forging major to a diversified defence and aerospace manufacturer is beginning to take firm shape, offering a more resilient growth runway ahead.

 

At the core of the bullish narrative is BHFC’s swelling defence order book, now at nearly ₹114,000 crore and executable over the next three to four years. This, Motilal Oswal notes, places defence as the company’s most powerful growth driver in the medium term. The firm has also strengthened its capabilities across a broad spectrum of military platforms, from artillery guns such as ATAGs to small arms like carbines, along with key naval applications. With India’s defence manufacturing push accelerating and private-sector participation deepening, the brokerage believes BHFC is positioned to capture a larger share of long-term opportunities in the sector.

 

 

The aerospace vertical, too, is turning into a meaningful contributor. BHFC is targeting revenue of over ₹350 crore in FY26, up from ₹250 crore in FY25, and management expects the momentum to sustain as global aircraft manufacturing cycles remain strong. The company’s joint venture JSA is also seeing steady demand, though the near-term focus is on operational efficiency rather than scale expansion.

 

However, the optimism is tempered by persistent challenges in the commercial vehicles space. In the US, Class 8 truck demand remains weak due to ongoing inventory destocking, a trend Motilal Oswal expects will reverse only in the second half of CY26. While Europe’s CV outlook is stable, India presents a mixed picture. Domestic OEMs have reported healthy offtake in recent months, but the brokerage points out that visibility beyond the near term remains limited, especially with a high base effect clouding expectations for heavy-duty truck demand.

 

A major swing factor remains the performance of BHFC’s overseas subsidiaries, particularly its steel forging units. Management is actively evaluating restructuring options to restore profitability, with clarity expected only by the fourth quarter of FY26. The brokerage emphasises that a successful turnaround will be crucial for driving consolidated margin improvement.

 

Motilal Oswal expects BHFC to deliver a revenue/Ebitda/PAT CAGR of 11 per cent/14 per cent/28 per cent over FY25-28, aided by the strong traction in key domestic verticals. Yet, despite the favourable fundamentals, the stock’s current valuation, 54x FY26E and 38x FY27E consolidated EPS, already captures much of the upside, in its view. As a result, the brokerage has retained its ‘Neutral’ rating with a target price of ₹1,290, based on 32x September 2027 earnings.

 

That said, while defence and aerospace provide Bharat Forge with powerful engines of growth, the full rerating potential hinges on the recovery of CV markets and a successful restructuring of global operations, factors that Motilal Oswal analysts believe will take more time to play out. '    Disclaimer: The stock target and outlook has been suggested by Motilal Oswal. Views expressed are their own.