The agency has affirmed the company's short-term rating at '[ICRA] A1+'.
ICRA stated that the reaffirmation of the ratings continues to consider Bharat Forge Limited's (BFL's) leading position in the global automotive forgings industry, especially in the commercial vehicle (CV) chassis and engine components space.
The ratings also consider the company's large-scale operations, its diversified business portfolio with a strong customer base in the automotive and industrial segments across geographies, and its established relationships with leading global original equipment manufacturers (OEMs)for components supplied and its technical capabilities.
ICRA also notes that as part of its strategy to attain segmental diversification, BFL has been incrementally investing in the industrial components business. Further, favourable demand prospects and new orders, especially in the defence and aerospace sectors, are expected to support BFL's revenue growth and diversification prospects.
The ratings also favourably factor in BFL's strong liquidity position with unencumbered cash and liquid investments of over Rs. 3,090 crore on a consolidated level as of December 2024.
The strength of the ratings is partially offset by the high working capital intensity demonstrated by BFL over the years due to the high quantum of exports, leading to an elongated receivables position.
ICRA also notes the underperformance in overseas subsidiaries, especially in the aluminium forging business, in the recent past, which has had a bearing on the company's consolidated profitability to an extent, in FY2024 and 9M FY2025.
Nevertheless, comfortable profitability registered by the standalone entity continues to support the consolidated profitability of BFL.
While improvement in profitability of the overseas subsidiaries remains a monitorable as these markets face macroeconomic issues, the increasing revenue share from relatively high-margin business verticals such as defence and aerospace is expected to support the margin profile on a consolidated level, over the near term.
Bharat Forge (BFL) is the flagship company of the Kalyani Group, providing engineering solutions for diverse automotive and industrial applications. It is India's one of the largest forging companies with forging-based engine and chassis components with a focus on crankshafts and front-axle beams, the largest exporter of auto components, and among the leading manufacturers of industrial components. It has a diversified global customer base, including the top five CV and PV manufacturers in the world.
The company has reported an 8.4% fall in standalone net profit to Rs 346 crore, along with a 7.4% decline in total revenue to Rs 2,096 crore in Q3 FY25, compared with Q3 FY24.
The scrip tumbled 4.64% to currently trade at Rs 1042.40 on the BSE.
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