BALUFORGE

Diversifies Beyond Agriculture into Defence & Aerospace

(BFIL), historically a behind-the-scenes supplier of precision-machined components for automotive and farm equipment, is undergoing a strategic transformation. The company is diversifying into defence, aerospace, railways, oil & gas, marine, wind energy, and EVs, reducing its dependence on agriculture. A landmark artillery shell supply agreement with a NATO-affiliated entity underscores its entry into high-value defence manufacturing. Business Mix & Diversification - Traditional focus: crankshafts, clutches, brake components, hydraulic motors. - FY25 revenue mix: Agriculture 40%, Commercial Vehicles 18%, Heavy Engineering 18%, Power 10%, Defence 9%, Oil & Gas 5%. - Target by FY28: Agriculture down to 25%, Defence/Aerospace/Railways up to 25–30%. - Exports: 73.5% of revenue, spanning 80+ countries; Europe contributes 45%, Americas 20%, MENA 20%. Defence Breakthrough - Dedicated production line for 155 mm artillery shells (M107, ERFB variants). - Legally binding 5-year MoU with NATO-affiliated entity. - Supply commitment: 30,000 units of 155 mm shells + 10,000 units of 152 mm shells per month. - Pricing: $315 (~₹29,000) per unit, indexed to LME. - Revenue potential: ₹500–550 crore initially; >₹1,000 crore at full capacity. Manufacturing Backbone - Advanced 7-axis and 11-axis CNC machining lines commissioned in Q3FY26. - Machining capacity: 45,000 MTPA → 80,000 MTPA (next 12–18 months). - Forging capacity: 100,000 MTPA → 150,000 MTPA, supporting vertical integration. New Bets - Aerospace: turbine blades, compressor discs (launch by FY26). - Railways: wheels, axles, wheelsets (6,000 annually). - EVs: rotor carriers, drive shafts, eccentric shafts. Financials & Valuation - 9MFY26 revenue: ₹844 crore (+29% YoY); EBITDA: ₹240 crore (+36%). - PAT FY25: ₹204 crore (+119%); ROCE: 24%. - Valuation: 22x P/E, below 5-year median (32x) and peers (Happy Forgings 43x, AIA Engineering 30x, AMIC Forging 57x).