BDL share price up 8% today; targets suggest strong upside

Bharat Dynamics Ltd (BDL) jumped 8 per cent in Wednesday's trade after the PSU defence company reported strong set of June quarter results. While stock analysts largely retained their target prices post Q1 results, a brokerage upgraded the stock to 'Buy' following a 14 per cent selloff in the past one month. 

On Wednesday, the stock rose 8 per cent to hit a high of Rs 1,609 on BSE. 

BDL delivered strong 30 per cent YoY growth in execution in 1QFY26 on a strong order book and the easing of supply chain issues compared with last year. With Rs 23,300 crore in orderbook, MOFSL expects the BDL execution to scale up further in the coming quarters, particularly from Akash, Astra Mk1, MRSAM and armament projects.

"We expect BDL to benefit from a strong prospect pipeline of nearly INR500b and an emergency procurement program. We had initiated coverage on BDL in July with Neutral recommendation due to high valuations. Since then, the stock has come down and is now trading at reasonable valuations of 39x/29x FY27E/FY28E EPS. We, thus, upgrade the stock to 'Buy' with an unchanged target of Rs 1,900," MOFSL said.

The government’s higher defence capex and growing export clearances position BDL for both domestic and international growth, Nirmal Bang Institutional Equities said. 

For Nuvama, Bharat Dynamics' Q1 profitability was subdued, overshadowing robust execution. The strong order backlog and Rs 42,800 crore of pipeline lends earnings visibility over the next four–five years, it said.

"Timely/profitable execution along with huge exports optionality from friendly countries remain key catalysts. Maintain ‘Buy’ as we are building in 51 per cent/66 per cent revenue/EPS CAGR over FY25–28E, 23–23.5 per cent OPM accounting for gains from easing of supply-crunched critical imports (chips and warheads) along with backward integration in our view," Nuvama said. 

This brokerage suggested an unchanged target price of Rs 2,250 on BDL.

Nuvama forecast BDL’s order pipeline over next 3–4 years at Rs 42,800 crore underpinned by steady base orders of Rs 2,000 crore annually for SAMs, torpedoes and refurbishment. Major upcoming programmes include Astra Mk I, Astra Mk II, QRSAM and LBRM while additional opportunities span SAAW, NAG/Helina ATGM, Spike ER2, LRLACM, it noted.