Bharat Dynamics Q3 Results Review - Weak Performance But Outlook Remains Strong: ICICI Direct

ICICI Direct Report

Bharat Dynamics Ltd.'s revenue for the quarter declined 42.6% YoY to Rs 461.6 crore; significantly lower than our estimate of Rs 862.6 crore. Sequentially, revenue declined 13.7%.

The de-growth in revenue both YoY and QoQ shows muted execution during the quarter in its existing contracts. Nine months-FY23 revenue was up 17.8% YoY as the revenue was significantly up during Q1 FY23 (up 440.3% YoY) on lower base.

Gross margins improved 619 basis points YoY and 1436 bps QoQ to 69.8% as raw material cost declined considerably both YoY and QoQ. Ebitda margins came in at 19.3% (versus estimate of 27%); down 1674 bps YoY led by significantly higher others cost (25.1% of sales in Q3 FY23 versus 8.6% of sales in Q3 FY22). Sequentially, Ebitda margin improved 171 bps.

9MFY23 Ebitda margin was also down 911 bps YoY at 13.3%.

Bharat Dynamics' Ebitda declined 69.3% YoY (down 5.3% QoQ) to Rs 88.9 crore (versus estimate of Rs 232.9 crore). The 9MFY23 Ebitda was down significantly by 30.1% YoY to Rs 224.8 crore.

Profit after tax was at Rs 83.7 crore, down 61.1% YoY led by a decline in revenues and contraction in margins. 9MFY23 profit after tax was down 15.5% YoY to Rs 199.4 crore.

Order backlog was at Rs 11906 crore as of November 2022 end (3.8 times trailing twelve months revenues).

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