 "Bharat Dynamics at 4-month high; up 19% in 3 days on Rs 2,960-cr order wins")
Shares of Bharat Dynamics (BDL) hit a four-month high of Rs 1,344.65, gaining 5 per cent on the BSE in Monday’s intra-day trade, and extending its past two days' of upward movement, on winning an order worth Rs 2,960 crore. In three days, the stock price of the state-owned defense company has surged 19 per cent. It is quoting at its highest level since September 4, 2024. The stock had hit a record high of Rs 1,794.70 on July 5, 2024.
On January 16, 2025, BDL announced that the Ministry of Defense (MoD) has signed a contract with the company for the supply of Medium-Range Surface-to-Air Missiles (MRSAM) for the Indian Navy at a cost of approximately Rs 2,960 crore.
The MRSAM system is a standard fit, onboard multiple Indian Naval Ships and is planned to be fitted on the majority of the future platforms planned for acquisition. The contract marks a critical milestone in the ongoing efforts to bolster India’s defence capabilities and indigenise advanced military technology.
BDL is engaged in the manufacturing of missiles and allied defence equipment. The company provides a majority of its goods and services to the Indian Armed forces and the Government of India. The Government of India’s initiatives to make India self-reliant in providing state-of-the-art weapon systems to the Indian Armed Forces, as well as clearance for export to Friendly Foreign Countries (FFCs), have created several opportunities for BDL to grow, expand and make in-roads into new markets.
With this contract, the total order intake for the company during YTDFY25 is approximately Rs 3,110 crore (vs Rs 1,793 crore in FY24). Order backlog, estimated to be at around Rs 21,000 crore (9.5x TTM revenue), gives a healthy revenue visibility. Order pipeline also remains strong in missiles, torpedoes, sonobuoys, countermeasure dispensing systems, etc. Orders execution will be the key thing to watch out for in the coming period as the execution has been impacted in the last two quarters (H1 revenue was down 19 per cent YoY) due to supply chain issues, ICICI Securities said.
According to CRISIL Ratings, BDL’s revenue in the near-term is expected to grow by 28 per cent-30 per cent in fiscal 2025 and 13-15 per cent on year in the medium-term led by stable order execution rate and healthy order book addition expected which stood at Rs 19,434 crore as on March, 2024. BDL has been focusing on indigenisation of components and reducing its dependence on imports. Operating margins, on the other hand, are expected to moderate and remain range bound between 17-18 per cent in the near to medium-term, on the back of normalisation of product mix and ramp up expected in R&D spends.
BDL is strategically important to the Government of India (GoI), considering it is the primary agency to produce guided missiles for the armed forces. The company is the exclusive service provider for indigenously developed guided missiles such as Akash surface-to-air missiles and Konkur anti-tank guided missiles. It also benefits from GoI's thrust on indigenous guided weapon systems production, leading to a healthy order flow and strong financial support from the government in the form of healthy advances for all its orders, the rating agency said in rationale.