Balu Forge Industries Limited

Industrials — Metal Fabrication · NSE

₹483.00+₹6.55 (+1.37%)

DalalBaazaar Score

64 / 100

🟢 Good

Verdict

REASONABLE

Risk

High

Driven by high debt relative to equity, negative free cash flow, small-cap size, which brings sharper price swings.

In simple words: Strong business and financial position, with both sales and profits growing well. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Balu Forge Industries Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Balu Forge Industries Limited manufactures and sells crankshafts in India and internationally.

IndustryMetal Fabrication

SectorIndustrials

Employees179

Annual revenue₹1,080 Cr

How does it make money?

Turns over ₹1,080 Cr a year. Of every ₹100 of sales, about ₹24 reaches shareholders as profit, with ₹32 left at the operating level before interest, tax and depreciation. Each of its 179 employees supports ₹6.04 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin32.0%

Net margin24.0%

Revenue / employee₹6.04 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, HINDALCO INDUSTRIES LTD, VEDANTA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA STEEL LIMITEDP/E 19.8x · ROE 10.8%

JSW STEEL LIMITEDP/E 12.0x · ROE 24.7%

HINDALCO INDUSTRIES LTDP/E 12.3x · ROE 12.0%

VEDANTA LIMITEDP/E 10.4x · ROE 18.7%

What is its competitive advantage?Some evidence

ROCE of 19.5% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE19.5%

ROE16.2%

Peer median ROE18.7%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +235% while net margin moved +99% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+235%

Margin effect+99%

DalalBaazaar Score

64/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.65 — historically steadier than the index
✗ Small Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

66/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

59/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

20.1x

3Y Median

49.1x

32 monthly readings · mean 48.9x · range 20.1x–109.5x

Sector Median

12.2x

median of 4 sector peers

🟢Current valuation is approximately 59% below its 3y median of 49.1x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 65% above the peer median of 12.2x.

vs. its own history

Cheap

49.1x median over 32 months · -59%

vs. sector peers

Expensive

12.2x median of 4 peers · +65%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

20.1x

P/B

3.14x

EV/EBITDA

17.1x

PEG

0.23

Dividend Yield

0.03%

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from 18.8% to 32.0% over 3 years.
Valuation below its historical average
At 20.1x the stock trades 59% below its own median of 49.1x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention5

Debt is rising
Total debt is up 193% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from 19.7% to 16.2% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 28.1% to 19.5% — often a sign of competition or overexpansion.
Inventory building faster than sales
Inventory is up 317% against revenue growth of 235% — stock may not be moving.

Red Flags

6 items require attention · 5 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 193% over 3 years, from ₹52 Cr to ₹152 Cr.
🔴High leverageFinancial
Debt/Equity of 9.52x — earnings must service borrowings before shareholders see anything.
🔴Free cash flow negative for 3 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Inventory building faster than salesFinancial
Inventory up 317% against revenue up 235% — stock may not be moving.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 46% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 19.5% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 18.8% to 32.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 59% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 9.52x. Interest is payable whether or not the business has a good year.
A premium to the sector to defend
It trades 65% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from 19.7% to 16.2%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 37% a year✓ 49.6% CAGR
Latest reported year was 29.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 30%✓ 32.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹175 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.4x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 16%✓ 19.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 11 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 4 neutral · 2 weak

Market Cap

₹5,863 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

20.1x

Fair

Fairly valued against the generic band

P/B Ratio

3.14x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹24.01

Profitable

Profitable on a per-share basis

ROE

16.2%

Strong

Strong capital efficiency

ROCE

19.5%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

9.52x

High

High leverage

Revenue Growth (YoY)

29.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

88.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.03%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹175 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹483

Operating Margin

27.1%

Good

Healthy core-business profitability

Net Margin

22.8%

Good

Strong bottom-line conversion

Current Ratio

3.54

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.65

Defensive

Steadier than the market

52W Range Position

44%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

497.6 / 524.4

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

40.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹323 Cr	₹553 Cr	₹906 Cr	₹1,080 Cr	+49.6%
EBITDA	₹61 Cr	₹125 Cr	₹265 Cr	₹346 Cr	+78.6%
EBITDA Margin	18.8%	22.7%	29.2%	32.0%	—
PAT (Net Profit)	₹39 Cr	₹93 Cr	₹204 Cr	₹259 Cr	+88.1%
EPS	₹4.67	₹9.72	₹18.38	₹23.9	+72.3%
ROE	19.7%	16.9%	19.4%	16.2%	—
ROCE	28.1%	21.2%	24.3%	19.5%	—
Total Debt	₹52 Cr	₹49 Cr	₹40 Cr	₹152 Cr	+43.1%
Free Cash Flow	₹5 Cr	-₹166 Cr	-₹267 Cr	-₹175 Cr	—

🟢 Revenue has grown at 49.6% a year over 3 years.

🟢 EBITDA has grown at 78.6% a year over 3 years.

🟢 EBITDA Margin has risen from 18.8% to 32.0% over 3 years (+13.2 pts).

🟢 PAT (Net Profit) has grown at 88.1% a year over 3 years.

🟢 EPS has grown at 72.3% a year over 3 years.

🔴 ROE has fallen from 19.7% to 16.2% over 3 years (-3.5 pts).

🔴 ROCE has fallen from 28.1% to 19.5% over 3 years (-8.6 pts).

🔴 Total Debt has grown at 43.1% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹5 Cr to -₹175 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,851 Cr

Total Liabilities

₹256 Cr

Total Debt

₹152 Cr

Cash & Equivalents

₹86 Cr

Operating Cash Flow

₹32 Cr

Capex

-₹207 Cr

Shareholding (proxy)

Institutional Holding

1.5%

Insider Holding

63.1%

Corporate Actions

Dividend Rate

₹0.15

Ex-Dividend Date

18 Sept 2026

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
HINDALCO INDUSTRIES LTD	12.3x	12.0%
VEDANTA LIMITED	10.4x	18.7%

Recent News

1 positive3 mixed2 general

Solid Earnings May Not Tell The Whole Story For Balu Forge Industries (NSE:BALUFORGE)

Simply Wall Street, 07 JunResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Balu Forge Industries Share Price rises 5.19%: analysis

Univest, 26 AugPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Balu Forge Industries Ltd. Peer Comparison – Compare with Others

Value Research, 30 Aug

Balu Forge Industries Ltd leads gainers in 'A' group

Business Standard, 14 Aug

Balu Forge Industries Share Price Rise 8.69% As Company Signs 5-Year MoU For Large Calibre Ammunition Supply

HDFC Sky, 26 FebPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Balu Forge FY26 PAT rises 27% to Rs 2,589 Mn, revenue up 19.9%

scanx.trade, 25 MayResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong14.3/20

🟡Financial HealthAdequate9.9/20

🟢GrowthStrong14.9/20

🟢ProfitabilityStrong10.2/15

🟢ValuationAttractive10.7/15

🔴RiskHigh4.1/10

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 5 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 37% a year49.6% CAGR
✓EBITDA margin holds above 30%32.0%
✗Free cash flow remains positive-₹175 Cr
✓Debt / EBITDA stays below 2x0.4x
✓ROCE stays above 16%19.5%