How has been the historical performance of Balu Forge?

Revenue and Profit Growth

Over the five-year period, Balu Forge’s net sales surged from ₹142.09 crores in March 2021 to ₹923.62 crores by March 2025, reflecting a compounded growth that underscores robust demand and operational scaling. The total operating income mirrored this trend, with no other operating income reported, indicating that core business activities drove the revenue expansion.

Operating profit before depreciation, interest, and tax (PBDIT) excluding other income rose sharply from ₹12.24 crores in March 2021 to ₹251.11 crores in March 2025. Including other income, operating profit reached ₹268.25 crores in the latest fiscal year, nearly a fifteenfold increase from ₹17.49 crores in 2021. This improvement was accompanied by a steady rise in operating profit margin, which expanded from 8.61% to 27.19%, signalling enhanced operational efficiency and cost management.

Profit after tax (PAT) also exhibited strong growth, climbing from ₹7.62 crores in March 2021 to ₹203.86 crores in March 2025. The PAT margin improved significantly from 5.36% to 22.07%, reflecting both top-line growth and effective expense control. Earnings per share (EPS) followed suit, increasing from ₹1.11 to ₹18.40 over the same period, highlighting substantial value creation for shareholders.

Cost Structure and Margins

Balu Forge’s raw material costs increased in line with revenue growth, rising from ₹119.56 crores in 2021 to ₹607.75 crores in 2025. Despite this, the company managed to improve gross profit margins from 7.66% to 27.86%, indicating better pricing power and operational leverage. Employee costs also rose steadily but remained a small fraction of total expenditure, reflecting controlled labour expenses amid expansion.

Other expenses increased but at a slower pace relative to revenue, supporting margin expansion. Interest costs fluctuated but showed a declining trend in the latest year, easing from ₹13.64 crores in 2024 to ₹10.96 crores in 2025, which helped boost net profitability.

Balance Sheet Strength and Asset Growth

The company’s total assets grew substantially from ₹170.76 crores in 2021 to ₹1,250.50 crores in 2025, driven by investments in gross block and capital work in progress, which expanded from ₹41.20 crores and nil respectively in 2021 to ₹185.52 crores and ₹417.11 crores in 2025. This indicates significant capacity expansion and capital expenditure to support future growth.

Shareholders’ funds increased markedly from ₹77.51 crores to ₹1,053.22 crores, reflecting retained earnings and equity infusion. The book value per share rose from ₹10.96 to ₹86.98, underscoring enhanced net worth per share. Total debt showed a moderate increase but remained manageable relative to equity, with total borrowings at ₹35.91 crores in 2025 compared to ₹23.89 crores in 2021.

Cash Flow and Liquidity

Operating cash flow demonstrated volatility but turned strongly positive in the latest fiscal year, with ₹148 crores generated in 2025 compared to a negative ₹31 crores in 2024. This improvement was supported by better working capital management and higher profitability. Investing activities reflected heavy capital expenditure, particularly in 2025 with outflows of ₹416 crores, consistent with asset growth. Financing activities provided substantial inflows, mainly from equity and borrowings, to fund expansion.

Closing cash and cash equivalents increased to ₹93 crores in 2025 from ₹2 crores in 2021, indicating improved liquidity and financial flexibility.

Summary and Investor Takeaway

Balu Forge’s historical performance over the last five years reveals a company on a strong growth path, characterised by rapid revenue expansion, improving profitability, and a solidifying balance sheet. The consistent rise in operating and net margins highlights effective cost control and operational efficiency. Capital investments suggest a focus on scaling production capabilities to meet growing demand.

While the company has increased its debt levels moderately, the growth in equity and cash reserves provides a comfortable cushion. The positive shift in operating cash flow in the latest year is a favourable sign for sustaining operations and funding future growth without excessive reliance on external financing.

For investors, Balu Forge presents a compelling case of a mid-cap industrial player that has successfully leveraged market opportunities to enhance shareholder value. However, as with any growth-oriented company, monitoring capital expenditure and working capital trends will be crucial to assess ongoing financial health and return prospects.

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