BDL shares: Target price trimmed, but brokerage maintains 'Accumulate' call on FY27 optimism

Bharat Dynamics Ltd (BDL) saw a negative surprise on all fronts as the execution delay related to surface-to-air missile (SAM) projects dragged sales and subsequently margin, ElaraCapital stated.

"We believe the delay was on account of post-testing observations, which are now being incorporated, resulting in delay in deliveries; however, it is likely these issues are transient, with full recovery expected in FY27," the domestic brokerage added.

"Although BDL missed sales CAGR target of 30 per cent for FY26, it has a closing orderbook of ~Rs 26,000 crore, to be executed in the next 3-4 years and robust order visibility; we expect sales growth to improve hereafter," it also said.

Elara reduced its target price, while maintaining the 'Accumulate' rating.

"We lower our TP to Rs 1,315 (from Rs 1,580) on 38x March FY28E P/E, due to muted performance in FY26 on sales and margin fronts. However, we retain Accumulate as issues are set to subside by FY27, and BDL has a robust order pipeline in the near term along with unexplored export opportunities," it stated.

"We expect BDL to be a key beneficiary of a robust order pipeline, which includes quick reaction surface-to-air missile (QRSAM) worth Rs 10,000-12,000 crore, Astra missile order, MRSAM for the Navy, exports order for Akash, and small-ticket orders for Nag, Helina, and Dhruvastra missiles," Elara noted.

"The company has developed an unmanned aerial vehicle (UAV)-launched precision guided missile (ULPGM), which is likely to garner robust demand, due to its unique nature of launching missiles through a drone which returns. BDL is collaborating with the Defence Research and Development Organisation (DRDO) to develop new products to help propel revenue growth," it further stated.

Separately, Motilal Oswal Financial Services Ltd (MOFSL) and Nuvama Institutional Equities have downgraded the stock to 'Neutral' and 'Reduce', respectively.

Meanwhile, BDL shares were last seen trading 1.38 per cent higher at Rs 1,222.90 in Wednesday's trade.