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ICICI Securities Report
Bharat Dynamics Ltd.'s Q2 FY24 performance was resilient led by pick-up in execution. Key points:
In our view, profitability was aided by execution of anti-tank guided missiles – most of which have high indigenous content;
revenue growth was partially aided by making up of some shortfall in FY23; and
other income was aided by customer advances received post ordering of Akash third and fourth regiment.
Going ahead, we expect execution to pick up further aided by surface to air missiles, Astra Mk-1 and underwater weapons such as torpedoes. At this stage, we see no risk to our FY24E revenue estimate of Rs 3200 crore.
However, we will keep a close tab on the ongoing Israel-Palestine war that might delay the supply of sub-components for medium-range surface to air missiles.
We maintain 'Buy' on Bharat Dynamics with an unchanged target price of Rs 1,325 (discounted cash flow based).
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