Bharat Dynamics rises 4% on hopes of strong order inflow from FY25

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Shares of Bharat Dynamics Ltd (BDL) rose percent on June 15 on hopes of improvement in order inflow from FY25. At 10:40 am, the defence company’s stock was quoting at Rs 1,142.60, up 3.42 percent. The stock has risen 27 percent in the past three months.

“Despite revenue growth remaining elusive thus far, we see several bright spots for BDL as significant order inflow is expected FY25 onward,” said ICICI Securities after speaking with the company’s management on June 13, 2023.

The domestic brokerage firm has pruned its FY24 and FY25 estimates by 21 percent and 8 percent, respectively, as execution is likely to gain momentum from FY26. According to ICICI Securities, revenue will likely pick up from FY26 and it sees revenue in FY27 at 2 times FY24 levels.

BDL anticipates receiving orders for QRSAM, HELINA ATGM, and NAG ATGM in FY26, and orders for Akash NG, VLRSAM, and MPATGM in FY27 in collaboration with DRDO. Moreover, the company is actively engaged with the Indian Air Force to finalise a contract for procuring a domestically developed smart anti-airfield weapon. The DRDO has conducted tests for two different SAAW configurations, and BDL expects to receive the order in FY27.

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According to ICICI Securities, the order book as of May 2023 stands at Rs 20410 crore, indicating a robust bill-to-book ratio (trailing twelve months) of 8.2 times. The order inflow for April and May 2023 amounted to Rs 520 crore, it added.

However, owing to earnings growth from FY27, the brokerage firm has hiked its target price on the stock to Rs 1,325 from Rs 1,175.

The management has guided for a target revenue of Rs 3,200 crore and EBITDA margin of 20-23 percent in FY24.

“We perceive BDL as an attractive investment opportunity for the medium term as both orders and execution are likely to pick pace,” said ICICI Securities.

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