Capital Goods

Forgings & Land Systems

Bharat Forge's defence pivot vs RK Forgings' governance reset

Heavy capitalOligopoly2 listed names covered

Forging is scale + metallurgy + press capacity. Bharat Forge is executing the sector's best defence pivot (ATAGS ₹6.9K Cr artillery win, protected vehicles, aerospace cells); Ramkrishna Forgings imploded on an FY26 inventory write-down discovered in audit — a governance event that resets its multiple regardless of the rail-wheel JV promise.

TAM: Artillery modernisation ₹40K Cr (ATAGS + MGS + wheeled guns); rail wheel import substitution ₹2.3K Cr JV awarded; global CV forgings cyclical base.

Demand drivers

▸ATAGS induction + follow-on regiments
▸Kalyani protected-vehicle exports (Armenia etc.)
▸Rail wheel Make-in-India program (RKFL-Titagarh JV)
▸Aero forgings via Safran/GE sourcing shift

Competitive dynamics

▸Bharat Forge vs global (Sona-comp-style auto exposure) — defence/aero mix is the differentiator
▸RKFL post-write-down: auditor confidence rebuild required before re-rating
▸Press capacity is the entry barrier — 10 relevant heavy presses in India

Unit economics

▸Auto forgings 15-18% OPM cyclical; defence/aero forgings 22-28%
▸Artillery systems: ~₹40 Cr per ATAGS unit, 20%+ margins at volume
▸RKFL FY26: PAT ₹415→72 Cr on write-down — the number that defines it now

Key programs

▸ATAGS serial production + exports
▸Kalyani M4 vehicle orders
▸RKFL-Titagarh wheel plant ramp (FY27)
▸US/EU CV forging cycle recovery

What an expert watches

▸ATAGS follow-on order quantum
▸Bharat Forge US tariff exposure on exports
▸RKFL forensic/audit closure and auditor commentary
▸Defence % of Bharat Forge consolidated (re-rating math)

Sector scoreboard — real data

Company	Mkt cap	P/E	OPM	ROCE	Sales 3Y	Fundamental	Tech score	Decision
Bharat Forge	₹1.06 L Cr	89.5x	17%	13.1%	9.2%	60	83	Hold / Watchlist
Ramkrishna Forgings	₹10.2K Cr	127.0x	15%	5.6%	9.9%	32	71	Sell / Avoid