Balu Forge Q1 FY27 Results (NSE: BALUFORGE)
Signal: Margin pressure
The read
The quarter marks a sequential margin recovery after Q4FY26 EBITDA margin fell to 22.7%: consolidated EBITDA margin rebounded to 29.5% while revenue grew 14.1% QoQ, but the year-on-year gross-margin headwind, finance-cost increase of 105.9% and EPS growth of only 8.9% show that the defence and aerospace capacity ramp has not yet translated proportionately into per-share earnings.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹300.71 Cr | 28.9% | 14.1% |
| EBIT | ₹85.32 Cr | 18.1% | |
| Net profit | ₹66.09 Cr | 15.9% | |
| EPS | ₹5.49 | 8.9% | |
| EBIT margin | 29.5% |
P&L walk
Consolidated revenue rose to ₹300.71 crore, up 28.9% YoY and 14.1% QoQ, while EBITDA increased 19.8% YoY to ₹88.64 crore; margin remained strong at 29.5%, but finance cost and depreciation rose 105.9% and 96.5% YoY respectively, limiting PAT growth to 15.9%.
Segments
There is no formal segment-results table, but consolidated PAT of ₹66.09 crore versus standalone PAT of ₹37.79 crore indicates that subsidiaries contribute approximately ₹28.30 crore of group profit and are driving a material portion of earnings.
Key positives
- Revenue reached ₹300.71 crore, up 28.9% YoY and 14.1% QoQ, reversing the Q4FY26 revenue decline of 2.2% YoY.
- Defence, aerospace and railway contribution increased to 34% of Q1FY27 revenue from 13% in FY26, while these sectors represent approximately 50% of the order book.
- The company commissioned a 360,000-shell-per-annum large-calibre ammunition line and began serial production of 152mm and 155mm shells.
- The maiden US aerospace order and induction into the NATO supply chain expand qualification-led access to higher-value engineering markets.
- Standalone EBITDA margin was 34.4%, up 50bps YoY, showing that the parent business retained strong operating profitability despite consolidated input-cost pressure.
Key concerns
- Raw-material cost rose 32.9% YoY versus revenue growth of 28.9%, lifting raw-material intensity to 63.7% from 61.8%; the company therefore absorbed part of the cost increase and gross margin compressed 190bps.
- Finance cost increased 105.9% YoY to ₹46 million and depreciation increased 96.5% to ₹33 million, creating a heavier fixed and financing-cost burden during the capacity ramp.
- EBITDA growth of 19.8% lagged revenue growth of 28.9%, while EBITDA margin declined 150bps YoY, so the quarter does not meet the evidence threshold for operating leverage.
- EPS growth of 8.9% materially lagged PAT growth of 15.9%, requiring monitoring for dilution or a rising share count.
Research and educational content only. Not investment advice.