Bharat Dynamics shares up 52% in a month; brokerage sees more steam left in this multibagger

Shares of Bharat Dynamics Ltd (BDL) on Friday gained 4.41 per cent to settle at Rs 1,430.30. At this price, the stock has surged 51.52 per cent in the past one month. With that being said, the multibagger counter has delivered 147.82 per cent returns in a year. Despite the mentioned gains, the defence PSU's scrip was down 13.84 per cent from its record high of Rs 1,660, a level seen earlier this week on June 3 (Monday).

Choice Broking has give a 'Buy' call on BDL shares with an upside target price of Rs 1,560. "We are expecting the company will get Rs 6,000-7,000 crore worth Astra weapon system contract for supplying of nearly 450-500nos Astra Mk-1 BVR missile system, which is the best in its class of weapon systems in the world, in the category of air-to-air missiles with a formidable range exceeding 100 kilometers," the domestic brokerage stated.

Apart from this the company also signed an agreement with MBDA, Europe’s leading missile manufacturer to establish a facility for the final assembly, integration, and testing (FIAT) of the advanced short range Air-to-Air missile (ASRAAM) within India, it added.

"Expecting significant order from the IAF in the coming year FY26-27, specially to arm the LCA-Tejas Mk1A fighter jet. The Jaguar aircraft of the IAF were the first to be equipped with this cutting-edge missile. Now it replace the ageing Matra Magic R550 missiles. The IAF is envisions the ASRAAM to its entire fleet includes Sukhoi-30MKI, Rafale, Tejas for close quarter defence capabilities," Choice further stated.

"BDL is inline with capability building to carter future growth. We expect order execution to pick up from FY25 onwards led by various order execution such as in the near term. BDL expects execution of program such as Astra Mk-1, SAAW, ULPGM, Drone fired Bombs, SPIKE ER, 70MM LGR orders by FY25, and QRSAM, NAG ATGM, Advanced Torpedo, MIGM, GRAD Rockets by FY26. Post that  the company expects Akash NG, VLRSAM, MPATGM, Heavy weight Torpedo, AMOGHA III ATGM, MISTRAL, ASRAAM orders in FY27, supported by association with DRDO and in House R&D and Foreign Collaboration," the brokerage stated on order inflow.

In terms of earnings, Choice said, "BDL reported revenue for the quarter grew by 7 per cent YoY to Rs 850 crore ( vs our est. Rs 890 crore) and Rs 790 crore in Q4 FY23, topline was slightly below our expectations. Gross profit is grew by 34 per cent YoY/48 per cent QoQ basis to Rs 560 crore vs CEBPL est. Rs 490 crore. Gross margin improved by 1375bps YoY/ 260 QoQ to 67.1 per cent vs our est. 55.6 per cent. EBIDTA came at Rs 310 crore (+ 73 per cent YoY/ 166 per cent QoQ) (vs est. Rs 210 crore)."

We like to ascribe 'Buy' rating due to expensive valuation on the stock with a target price of Rs 1,560 (60x of FY26E EPS), Choice underscored.

Bharat Dynamics is a public sector undertaking (PSU) under the defence ministry.