Bharat Dynamics jumps 5% on strong outlook; stock up 23% in 2 weeks

Shares of Bharat Dynamics (BDL) surged 5 per cent to Rs 984.50 in Wednesday’s intra-day trade, on strong business outlook. In the past two weeks, the stock rallied 23 per cent after the state-owned aerospace & defense company said that it has received export order worth $255 million. The order will be executed subject to government clearances.

Meanwhile, BDL entered into 10 Memorandum of Understandings (MoU) with several foreign and Indian companies during the Aero India – 2023.

BDL entered into MoU with Thales to set up manufacturing facilities for Laser Guided Rocket and its major components in India. Additionally, an MoU was signed by BDL with EDGE Group entity, AL TARIQ, UAE to jointly produce an all-weather, day/ night, long-range precision guided munition (LR-PGM) kits in India.

Moreover, during Aero India 2023, BDL also launched three new products; Vertical Launched Short-Range Surface to Air Missile (VLSRSAM), Semi-Active Laser Seeker Anti-Tank Guided Missile (SALS ATGM) for BMP-II, and Drone Delivered Missile (JISHNU).

BDL is one of the leading defence PSUs in India engaged in the manufacture of surface to air missiles (SAMs), anti-tank guided missiles (ATGMs), air to air missiles (AAMs), underwater weapons, launchers, countermeasures, and test equipment.

Analysts at ICICI Securities have ‘buy’ rating on BDL, with a target price of Rs 1,010 per share. The brokerage firm said that the order book of Rs 11,906 crore (3.8x TTM revenues) gives a strong revenue visibility.

"Moreover, Rs 20,000 crore worth of orders are in the pipeline (Akash surface to air missile, medium range surface to air missiles, Mistral man portable air defence system, advanced short range air-to-air missile, etc). The company is expanding capabilities to enhance market position and competitiveness. The company is continuous investment in R&D and expanding infrastructure to develop new generation products. Huge opportunity in exports (Akash SAM, ATGMs, Astra, Torpedoes) driven by rising interest from friendly countries and lower cost on high indigenisation levels are key triggers for future price performance," the brokerage firm added.

However, in the October-December quarter (Q3FY23), BDL's revenues declined 42.6 per cent year-on-year (YoY) and 13.7 per cent sequentially to Rs 461.6 crore, due to weak execution. Earnings before interest, taxes, depreciation, and amortization (Ebitda) margin, too, contracted by 1674 bps YoY to 19.3 per cent, due to significant rise in others cost. Profit after tax, meanwhile, declined 61.1 per cent YoY to Rs 83.7 crore.

In the past one year, the stock zoomed 116 per cent, as against 5.5 per cent rise in the S&P BSE Sensex. It had hit a record high of Rs 1,026 on October 27, 2022.