This defence stock has zoomed over 45% in 6 days ahead of stock split

Shares of Bharat Dynamics hit a new high of Rs 2,689.40 as they rallied 10 per cent on the BSE in Tuesday's intraday trade amid heavy volumes, in an otherwise weak market.

The stock of the state-owned defence company is quoting higher for a sixth straight trading day, zooming 46 per cent during the period, and ahead of the proposed stock split. In the past two months, the stock has soared 66 per cent after the company announced sub sub-division of shares in the ratio of 1:2.

BDL has fixed May 24, 2024 as the record date for the purpose of determining the eligibility of shareholders for sub-division/ split of existing 1 equity share of face value of Rs 10 into 2 equity shares of face value of Rs 5.

On rationale behind the stock split, BDL said it aims to comply with Department of Investment and Public Asset Management (DIPAM) Guidelines on Capital Restructuring; to encourage wider participation of small investors; and to enhance liquidity of the equity shares of the company in the stock market.

In the past six months, the stock price of BDL has more-than-doubled, zooming 130 per cent, as analysts believe the company is strongly placed to benefit from increasing capital outlay for indigenised defence platforms like missiles, torpedoes & Countermeasure dispensing systems. In comparison, the S&P BSE Sensex was up 12 per cent during the period.

BDL, one of the leading defence PSUs in India, is 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 equipments.

BDL's future prospects appear promising, buoyed by a robust order book position and a stream of anticipated orders in the pipeline. In addition to that, the right support and policy initiatives from the Government of India further bolster the positive outlook ahead for the company.

"The Government of India, in its continuous pursuit of self-reliance in defence manufacturing under the 'Aatmanirbhar Bharat Abhiyan', has periodically issued a Positive Indigenisation list of sub-systems/assemblies/sub-assemblies/ components. As a result, the future outlook for the company appears promising, buoyed by a robust order book position," BDL said in its FY23 annual report.

The company’s order backlog is estimated at around Rs 20,000 crore (9x TTM revenue), which provides healthy growth visibility. Orders pipeline also remains strong (in both domestic and exports) which includes various SAM (Surface to Air missile) variants including Akash NG, Quick Reaction (QRSAM) & Vertical launched Short Range (VLSRSAM), ATGM (Anti-Tank Guided Missile) like Helina/Dhruvastra, Nag, MPATGM, Smart Anti-Airfield Weapon (SAAW), Astra MK2, torpedoes etc. The strong pipeline provides more comfort on future growth visibility, according to analysts.