Whereas lauding the defence producer’s sturdy order guide, export momentum, and earnings potential, the brokerage mentioned it will “search for cheaper price factors to enter the inventory” given the demanding valuations.
Shares of Bharat Dynamics fell 2.2% on Thursday to Rs 1,941.25 on the BSE.
Motilal Oswal expects a pointy scale-up in execution as provide chain headwinds ease, driving a 35% income CAGR and 51% PAT CAGR over FY25–28. “We just like the enterprise mannequin of BDL and its capacity to scale up its revenues and order guide in present situation,” the brokerage mentioned, however famous that the inventory is already buying and selling at 70x/52x/38x FY26/FY27/FY28 earnings, valuations it considers honest.
The goal worth of Rs 1,900 relies on 42 instances the corporate’s estimated earnings for September 2027.
BDL’s EBITDA margins are anticipated to stay sturdy at 24–26%, supported by backwards integration and a better share of indigenized merchandise. The corporate has indigenized 80–90% of a number of key missile platforms and is working with DRDO on about 40 growth packages.
Export momentum and order pipeline
BDL’s export income surged to Rs 12 billion in FY25 from Rs 1.6 billion the earlier yr, buoyed by demand for its Akash, Astra, and Helina missile programs, amongst others. The corporate has acquired export approvals for the Akash Weapon System to 9 international locations and is attracting additional curiosity for torpedoes and air-to-air missiles, the brokerage famous.
Its order guide at the moment stands at Rs 227 billion, with a possible addressable market of Rs 500 billion over the following few years, together with large-ticket orders such because the Fast Response Floor-to-Air Missile (QRSAM), Astra Mk1, and the indigenous long-range SAM system beneath Mission Kusha.
Defence spending tailwinds
The brokerage highlighted a supportive macro backdrop, with NATO’s revised 5% defence spending goal by 2035 and India’s latest Defence Acquisition Council approvals price Rs 1 trillion. These developments are prone to broaden the addressable marketplace for home defence producers.
Motilal Oswal additionally pointed to BDL’s diversification into new areas corresponding to drone-delivered payloads, cruise missile engines, and superior seekers, which may help long-term progress.
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Regardless of the promising outlook, the brokerage flagged dangers together with reprioritisation of India’s defence funds, delays in execution, and any adjustments in procurement coverage. Provide chain dependencies, although easing, stay a sensitivity given BDL’s integration with international distributors.
(Disclaimer: Suggestions, solutions, views and opinions given by the consultants are their very own. These don’t signify the views of the Financial Occasions)
