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Motilal Oswal Report

Bharat Dynamics Ltd. reported a weaker-than-expected Q3 FY26 performance, as execution was hampered by delays in component integration from upstream vendors. Additionally, margins came under pressure due to lower revenue and a higher proportion of bought‑out components used in the Akash and Astra Mk‑1 programs.

Despite the operational softness, order inflows remained strong, with Bharat Dynamics securing approximately Rs 5,400 crore in orders during 9 MFY26. The company also expects another \Rs 4,000–5,000 crore worth of orders in Q4 FY26, indicating sustained demand visibility across missile and defence systems.

Further, the near-to-medium-term prospects also remains strong. The brokearge believes that the higher share of bought-out components will continue to weigh on its overall margins.

Consequently, the brokerage has cut its FY26/FY27/FY28 earnings estimates by 21%/17%/14%, respectively.

Motilal Oswal now expects revenue/Ebitda/PAT CAGR of 35%/55%/44% over FY25–28 and has revised its target price to Rs 1,800 (from Rs 2,000 earlier), valuing the stock at 42x two‑year forward earnings.

The brokerage maintains its Buy rating, citing healthy order visibility and multi‑year growth drivers despite near‑term margin constraints.

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