Stock to SELL: Time to exit THIS defence stock? Motilal Oswal lists 5 major red flags

Motilal Oswal highlighted that Bharat Forge’s key export driver—the US Class-8 truck market—remains weak. Demand has not recovered as expected, and a sustained turnaround is unlikely before the second half of 2026, limiting the company’s export visibility.

 

The brokerage flagged ongoing challenges in the company’s European operations. High labour and energy costs, along with older plant structures, continue to depress margins. Any meaningful clarity on restructuring will likely emerge only by the March quarter of FY26.

 

The festive season gave a short boost to domestic CV demand, but the base remains high. Bharat Forge has also sounded cautious about sustainability. Motilal Oswal said this prevents a clean volume recovery, as both domestic and export cycles are not aligned.

 

The aluminium-forging arm, including K-Drive Mobility, is also under pressure. A legacy low-margin order and a five-year non-compete clause in North America limit near-term expansion. Improvement will come, the brokerage said, but not fast enough to lift upcoming quarters.

 

Defence orders remain strong on paper, but conversion to revenue will take time. The ATAGS order is expected to enter production only by FY27. Aerospace revenue is rising but still too small to offset pressures in trucks and Europe, Motilal Oswal noted.

 

 

According to the brokerage, Bharat Forge trades at around 54 times FY26 estimated earnings—pricing in smooth execution across defence, aerospace and other verticals. But with many moving parts and near-term uncertainties, Motilal Oswal warns that even small delays may impact performance.

 

The views, suggestions and recommendations expressed in this article are solely those of investment experts. Zee Business advises readers to consult their financial advisers before taking any investment decision.