Bharat Dynamics has a strong order pipeline of ~Rs 500 billion for the next five years, of which the company is targeting ~Rs 200 billion worth of orders to come in within the next two-three years. By FY30-31, the company expects to reach an annual turnover of Rs 100 billion.
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Motilal Oswal Report
Bharat Dynamics Ltd. delivered a strong performance in Q2 FY26 as supply chain issues started easing out, resulting in a sharp execution ramp-up.
However, margins were affected by project mix during the quarter. The company also announced an order inflow of Rs 20 billion from Invar anti-tank missiles, and Bharat Dynamics is expected to benefit from emergency procurement, QRSAM, follow-on Astra orders from Hindustan Aeronautics Ltd., VSHORADS, etc.
With a strong order book of Rs 235 billion and a focus on execution, we expect the company to grow revenue/Ebitda/PAT at 35%/64%/51% over FY25-28.
The stock is currently trading at 40.1x/29.2x P/E on FY27/FY28 estimates. We reiterate our Buy rating on the stock with a revised target price of Rs 2,000, based on 42x Dec’27E earnings.
Key risks and concerns
Key risks for the company include a decline or reprioritization of the Indian defense budget, termination of existing contracts or failure to succeed in tendering projects, changes in procurement rules and regulations of the MoD and the government, and supply-chain-related issues.
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Also Read: Samvardhana Motherson Q2 Review —Motilal Oswal Maintains 'Buy' On Long-Term Growth Opportunities
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