Shares of Bharat Forge scaled a record high, driven by a new ₹425 crore defence contract and surging orders for North American Class 8 trucks. Investors are focusing on the company’s growing defence backlog of ₹10,961 crore and the recovery in heavy commercial vehicle sales, which are expected to support revenue growth through FY27 and FY28.
What Happened
Bharat Forge shares concluded the week by hitting a fresh all-time high. The stock has outperformed the broader Nifty 50 index over the last month, gaining approximately 7%. The rally follows a combination of positive news for the company, including new defence contracts and a strong recovery in demand for commercial vehicles, particularly in North America.
Defence Order Book and Revenue Outlook
The company has secured a ₹425 crore contract from the Ministry of Defence to supply gas turbine generators for the Indian Navy’s Kolkata-class ships. This win adds to a robust defence order book, which currently stands at ₹10,961 crore. The company intends to execute these orders over the next four years, providing significant revenue visibility.
Bharat Forge’s defence subsidiary, Kalyani Strategic Systems (KSSL), is also expanding its global footprint. A strategic partnership with the US-based company AM General has been formed to target the export market for mounted artillery gun systems. Additionally, the companies are collaborating on a joint bid for the US Army's Mobile Tactical Cannon program. Management has projected defence revenues between ₹2,500 crore and ₹3,500 crore for FY27 and FY28, with profit margins expected in the range of 18% to 22%.
The Commercial Vehicle Tailwind
Beyond defence, the company’s core commercial vehicle segment is seeing a rebound. Preliminary data shows that net orders for Class 8 trucks in North America grew by 124% year-on-year, marking the fourth consecutive month of triple-digit growth in orders. While domestic commercial vehicle demand is expected to see more moderate growth, the strong performance in the US and European markets is driving export sales, which are a major part of the company's revenue mix.
Risks and Monitorables
While the company has clear growth drivers, investors should watch the risks associated with large, long-term order execution. The defence sector involves projects that can face delays or cost overruns, which could impact projected margins. Additionally, the company’s reliance on the North American commercial vehicle market makes it sensitive to cyclical demand patterns in that region. If fleet purchase decisions in the US slow down due to economic shifts or changing logistics requirements, it could impact the utilization of capacity in the coming quarters.
Investors will likely track the commissioning timelines for the artillery gun programmes, which are expected to ramp up in the second half of FY27, and the consistency of the North American truck order book in upcoming monthly reports.