Bharat Dynamics zooms 29% in two days on heavy volumes; stock hits new high

The market price of BDL has surged 35 per cent in six trading days after exchanging MoU with UAE firm to explore new business opportunities.

Shares of Bharat Dynamics (BDL) rallied 19 per cent to hit a new high of Rs 737.35 on the BSE in Friday’s intra-day trade. The stock has zoomed 29 per cent in past two trading days on the back of heavy volumes.

At 12:25 pm; the stock of state-owned aerospace and defence company was up 18 per cent at Rs 734, as compared to 0.44 per cent rise in the S&P BSE Sensex. The trading volumes on the counter jumped nearly five-times as 7.85 million equity shares changed hands on the NSE and BSE.

BDL is a public-sector enterprise supervised by the Ministry of Defence. The company manufactures Surface to Air Missile (SAM), Anti-Tank Guided Missile (ATG M), Torpedoes, and Allied Defence Equipments.

The market price of BDL has surged 35 per cent so far in April after UAE firm Tawazun Economic Council (TEC) exchanged Memorandum of Understanding (MoU) to explore new business opportunities in various areas of mutual interest in the field of defence.

TEC is defense and security acquisition authority for the UAE armed forces. It manages procurement, technical, contractual aspects for the UAE armed forces.

Under the MoU, both BDL and TEC will work together to identify different business opportunities and assess the viability and feasibility of implementing business opportunities in the field of co-development, co-production, establishment of joint ventures, set up of maintenance, repair, refurbishment, life extension facilities, supply of military products as well as licensed production. The duo will also explore the export possibility of the products to reach out global demands.

On February 2, 2022, the company signed a contract worth Rs 3,131.82 crore with the Indian Army. Under the contract, the company will manufacture and supply of Konkurs - M AntiTank Guided Missiles to the Indian Army in three years. "With this contract, the company’s order book position stands at Rs 11,400 crore (net)," BDL said in a statement.

Konkurs – M is being manufactured by BDL under license agreement with Russian OEM (Original Equipment Manufacturer). "The missile has been indigenized up to a maximum extent. BDL is also offering Konkurs- M missile for export to friendly foreign countries," added the management.

Meanwhile, BDL has an order backlog of Rs 11,400 crore (~4.2x FY22 sales) reflecting strong revenue visibility. ICICI Securities is bullish on company's prospects over large ticket projects, that will, eventually churn higher order book over next 3-4 years. "The government's focus on increasing indigenization in defence manufacturing and development of new products is poised well for BDL," the brokerage firm said.