Bharat Dynamics hits new high, stock up 27% in 3 weeks ahead of Budget

Shares of Bharat Dynamics (BDL) hit a new high of Rs 507.80, on rallying 5 per cent on the BSE in Monday’s intra-day trade ahead of Budget. The stock of state-owned defence company has rallied 27 per cent in the past three weeks, as compared to 4 per cent decline in the S&P BSE Sensex.

At 09:48 am; BDL traded 3 per cent higher at Rs 501, as against a 1.4 per cent gain in the benchmark index. A combined 232,000 equity shares changed hands at the counter on the NSE and BSE.

BDL, an Anti Tank Guided Missile (ATGM) company, has forayed into the field of underwater weapon systems and air-to-air missiles and associated equipment. It is the sole supplier of SAMs, Torpedoes and ATGMs in India. It is the lead integrator for Akash weapon system for Army. BDL has also designed and developed Counter Measure Dispensing System (CMDS) for the Indian Armed Forces (IAF).

As on December 1, 2021, BDL order book position stood at Rs 9,293 crore and key new orders in pipeline worth of Rs 15,000 crore, the company said. On December 2, the company and Indian Army signed a contract worth Rs 471.41 crore for Refurbishment of IGLA - 1M missiles.

BDL is a perfect proxy to PSU theme ahead of Budget. The stock has generated multi-year breakout on the back of rising volume, indicating start of a new bull phase. Thus, it offers fresh entry opportunity to ride next leg of secular up move, ICICI Securities said in budget top picks.

BDL has been working in collaboration with DRDO & foreign Original Equipment Manufacturers (OEMs) for manufacture and supply of various missiles and allied equipment to Indian Armed Forces. The company has significant opportunity in expanding its order-book to Rs 23,000-25,000 crore over the next two to three years, the brokerage firm said.

In FY21 BDL did revenue of Rs 1,914 crore with same run rate. There is revenue visibility of ~four years. Order-book accretion is highly visible, as platforms already approved by DAC include SAM (Akash) and ATGM (Astra) Also, BDL is manufacturer of Agni V (ballistic and nuclear) in India, ICICI Securities said with ‘Buy’ rating on the stock with target price of Rs 548.