Bharat Forge Capacity Expansion: ₹2,500 Crore Fund Raise

Bharat Forge capacity expansion plans include a proposed fund raise of up to ₹2,500 crore to support a fresh round of investment across its core manufacturing operations and newer businesses such as aerospace, semiconductors and power generation, as the engineering major prepares for its next phase of growth. The Pune-based company is planning capital expenditure of around ₹1,800 crore over the next 12-18 months, covering automotive and non-automotive applications across forging, machining, heat treatment and ring rolling, according to management's comments during an analyst call held to discuss its Q1 FY27 performance.

The spending will support areas including large engines, power generation, semiconductors and aerospace, as well as the company's upcoming energetics facility in Andhra Pradesh. Bharat Forge expects asset turnover from the investments to exceed 1.5 times, management said. The company's board on Monday approved raising up to ₹2,500 crore through equity shares, debt, convertible securities or a combination of instruments. The fund raise can be undertaken through routes including a qualified institutional placement, rights issue, preferential issue, further public offer or overseas instruments, subject to shareholder and regulatory approvals.

The company's Investment Committee–Strategic Business will decide the structure, pricing and timing of the issue. Part of the proposed fund raise will also support Bharat Forge's planned mega manufacturing site in Odisha, management said on the analyst call. The project is awaiting environmental clearance, which the company expects by the end of the year. Bharat Forge expects the first plant at the site to start operations around two-and-a-half years after receiving the required approval. The facility is planned around large aerospace and other high-value components, including products that are currently not manufactured in India, according to management.

The Odisha expansion is part of a wider manufacturing push by the Kalyani Group. In February, the Odisha government cleared a ₹3,000-crore Bharat Forge manufacturing unit in Dhenkanal for automotive and aerospace components. The development adds another major manufacturing location to the company's broader investment programme, while the planned Odisha site is expected to focus on large aerospace and other high-value components. The proposed investment also reflects the company's effort to expand specialised production capabilities and increase its participation in sectors beyond its traditional automotive forging business.

New Businesses Drive Capacity Addition

The fund raise comes as Bharat Forge increases investment outside its traditional automotive forging business. In its Q1 FY27 investor presentation, Chairman and Managing Director B N Kalyani said defence, aerospace, data centres and semiconductors were beginning to contribute to the company's Indian manufacturing revenue mix. “With new sectors such as Defence, Aerospace, Data Centers & semiconductors starting to contribute to the revenue mix, we are in the process of setting up dedicated forging & machining capabilities with an investment outlay of around Rs 1,800 Crores over 12-18 months,” Kalyani said. The company expects these investments to generate incremental revenue after commissioning.

Bharat Forge has maintained its 20-25% growth outlook for its Indian manufacturing business in FY27, with growth expected to be stronger in the second half of the year. Aerospace is one of the businesses expected to scale, with the company anticipating a material improvement in the vertical's year-on-year performance as recently won orders enter production. It also expects momentum in its high-horsepower engine business to pick up during the second half of FY27. These expectations underpin the company's broader plan to add specialised capacity as demand develops across newer industrial applications.

Bharat Forge's FY26 annual report said its aerospace revenue had grown to nearly five times its FY21 level, driven entirely by exports, as the company expanded from complex engine components into landing gear systems and aircraft structural parts. The company is also expanding into semiconductors. Its board on Monday approved the incorporation of a subsidiary in Malaysia for semiconductor and allied activities, subject to necessary approvals. The planned subsidiary represents another step in broadening the company's capabilities and geographic presence in specialised manufacturing areas connected with the semiconductor industry.

Defence Order Book Tops ₹11,000 Crore

Defence is another major contributor to the capacity programme. Bharat Forge's Indian operations won ₹1,352 crore of new orders in Q1 FY27, including ₹681 crore from defence. Its outstanding defence order book stood at ₹11,196 crore as of June 30, 2026. The company also secured its largest naval order during the quarter for 12 marine gas turbine generator sets from the Ministry of Defence. The order activity adds support to the company's continued investment in manufacturing capabilities serving defence and other high-value engineering applications.

The latest fund raise follows a ₹1,650-crore QIP undertaken in FY25. Bharat Forge said the proceeds from that issue had been fully utilised by September 2025, including ₹550 crore that was used towards the acquisition of AAM India Manufacturing Corporation. The new capital programme therefore comes after the company has already deployed the earlier QIP proceeds and is now preparing another funding round to support its next investment cycle. The proposed financing provides flexibility to fund capacity additions across both established and emerging business areas.

The new capital programme comes as Bharat Forge shifts a larger part of its investment towards businesses that require larger components, specialised materials and more complex machining, with aerospace, defence, large engines and semiconductors expected to play a bigger role in its growth over the coming years. The combination of planned capital expenditure, new manufacturing facilities, specialised capabilities and order visibility indicates a broader diversification of the company's manufacturing base. Management expects the investments to support incremental revenue after commissioning while maintaining its stated growth outlook for Indian manufacturing in FY27.

Frequently Asked Questions

How much capital does Bharat Forge plan to raise?
The company has received board approval to raise up to ₹2,500 crore through equity shares, debt, convertible securities or a combination of instruments. Potential routes include a qualified institutional placement, rights issue, preferential issue, further public offer or overseas instruments. The transaction remains subject to shareholder and regulatory approvals, while the Investment Committee–Strategic Business will determine the structure, pricing and timing. The proceeds are intended to support manufacturing capacity, newer businesses and the planned Odisha facility.

How much is Bharat Forge planning to invest over the next 12-18 months?
Bharat Forge plans capital expenditure of around ₹1,800 crore over the next 12-18 months across automotive and non-automotive applications. The investment covers forging, machining, heat treatment and ring rolling capabilities supporting large engines, power generation, semiconductors, aerospace and the upcoming energetics facility in Andhra Pradesh. Management expects asset turnover from these investments to exceed 1.5 times. The spending is also intended to establish dedicated capabilities for newer sectors that are increasingly contributing to the company's Indian manufacturing revenue mix.

What is the status of Bharat Forge's Odisha manufacturing project?
The planned mega manufacturing site in Odisha is awaiting environmental clearance, which the company expects by the end of the year. Management expects the first plant to begin operations around two-and-a-half years after receiving the required approval. The facility is planned around large aerospace and other high-value components, including products that are currently not manufactured in India. In February, the Odisha government cleared a ₹3,000-crore Bharat Forge manufacturing unit in Dhenkanal for automotive and aerospace components.