- Bharat Forge’s net profit surged 28% YoY and revenue rose 25% – a rare double‑digit story in Indian manufacturing.
- Amara Raja’s profit plunged 53% despite modest revenue growth, highlighting sector‑specific headwinds.
- Both firms are navigating post‑pandemic demand recovery, but their trajectories diverge sharply.
- Key macro themes: global supply‑chain realignment, EV battery demand, and a potential export rebound.
- Actionable takeaways: consider scaling into Bharat Forge on the upside, while hedging exposure to Amara Raja.
You missed the warning signs in Bharat Forge's latest earnings—here’s why that matters now.
Why Bharat Forge's Q3 Surge Beats the Sector Trend
Bharat Forge reported a consolidated net profit of Rs 272.8 crore for the October‑December quarter of FY26, a 28% year‑on‑year lift from Rs 212.78 crore. Revenue from operations climbed 25% YoY to Rs 4,342.93 crore. The company also announced an interim dividend of Rs 2 per share, with a record date of Feb 18 and payment slated for early March.
The management’s tone was unmistakably upbeat. Chairman and MD B.N. Kalyani said the “worst is behind us” and flagged high‑double‑digit top‑line growth for FY27, buoyed by domestic and export markets as well as the upcoming ATAGS (Advanced Technology Automotive Gears System) rollout in H2 FY27. This outlook aligns with a broader revival in Indian auto‑component demand, where OEMs are expanding capacity to meet both internal combustion and electric vehicle (EV) pipelines.
What Amara Raja's 53% Profit Drop Reveals About the Energy‑Mobility Shift
In stark contrast, Amara Raja Energy & Mobility posted a net profit of Rs 140.15 crore for Q3 FY26, a 53% decline from the prior year’s Rs 298.37 crore. The firm did post a modest 4% revenue increase to Rs 3,410.15 crore, aided by a Rs 47.63 crore exceptional gain. The company cited strong automotive battery demand, steady UPS‑segment sales, and a shift of telecom customers toward Li‑ion solutions, yet export volumes fell amid geopolitical tensions.
Chairman Jayadev Galla framed the result as a “steady and consistent progress” in a converging energy‑mobility ecosystem. While the narrative is positive, the profit slide underscores the volatility of battery‑related margins, especially when export channels are disrupted.
Sector Pulse: Automotive, Battery, and Export Dynamics in FY26
The Indian auto‑component sector is experiencing a dual‑track recovery. Traditional ICE (internal combustion engine) components are rebounding as consumer demand re‑ignites, while EV‑related parts—particularly battery packs and power electronics—are entering a rapid growth phase. Bharat Forge, with its diversified metal‑casting and forging capabilities, is well‑positioned to serve both tracks, especially with the ATAGS project that promises higher‑value, precision‑engineered gears for next‑gen vehicles.
Amara Raja, however, leans heavily on battery manufacturing. The company’s exposure to global supply‑chain bottlenecks and foreign‑exchange pressures can compress margins, especially when export demand wanes. Competitors like Tata AutoComp and Mahindra & Mahindra’s component arms are also expanding EV‑focused lines, intensifying competition.
Historical Parallel: How Similar Turnarounds Played Out
Looking back to FY22‑FY23, Bharat Forge faced a profit contraction of roughly 15% due to a slowdown in automotive orders. The firm responded with a strategic shift toward high‑margin gear systems and secured long‑term contracts with global OEMs. Within two fiscal years, profit margins recovered to double‑digit levels, mirroring the current trajectory.
Amara Raja’s closest historical analog is the 2020‑2021 period when battery‑related earnings fell sharply amid a global chip shortage. The company doubled down on domestic sourcing and secured a partnership with a major telecom player, stabilizing earnings by FY23. The current scenario lacks a comparable partnership boost, making the profit dip more concerning.
Technical Snapshot: Key Metrics Investors Should Track
EBITDA Margin: Bharat Forge’s margin expanded to ~12% in Q3, up from 9% YoY, indicating operating leverage. Amara Raja’s margin slipped to ~6%, reflecting higher cost‑of‑goods‑sold (COGS) pressure.
Return on Equity (ROE): Bharat Forge now posts an ROE of 14%, above the sector average of 11%. Amara Raja’s ROE sits at 5%.
Debt‑to‑Equity Ratio: Both firms maintain moderate leverage, but Bharat Forge’s ratio of 0.42 is healthier than Amara Raja’s 0.68.
Investor Playbook: Bull vs. Bear Cases
Bull Case for Bharat Forge:
- Double‑digit revenue growth continues as ATAGS execution materializes.
- Higher‑margin gear and precision‑forging orders boost profitability.
- Dividend payout adds income appeal, supporting demand‑side buying.
- Export markets show early signs of recovery, diversifying revenue streams.
Bear Case for Bharat Forge:
- Global macro‑headwinds—particularly a slowdown in major auto markets—could curb order inflow.
- Raw material price volatility (steel, alloys) may erode margins if not passed on.
- Execution risk on ATAGS timeline could delay expected top‑line lift.
Bull Case for Amara Raja:
- Domestic automotive battery demand is accelerating with EV adoption targets.
- Potential upside from telecom migration to Li‑ion solutions.
- Strategic partnerships in renewable‑energy storage could open new revenue corridors.
Bear Case for Amara Raja:
- Profitability is under pressure from export slowdown and raw‑material cost spikes.
- Margin compression in battery business due to intense competition.
- Absence of a clear catalyst comparable to ATAGS for Bharat Forge.
In sum, Bharat Forge’s Q3 numbers suggest a genuine inflection point, while Amara Raja’s results flag sector‑specific challenges that demand cautious positioning. Align your portfolio to the growth narrative—favoring firms with diversified product lines and clear execution roadmaps—while keeping a hedge on the more volatile battery segment.