BDL shares tumble over 8% after weak Q4 show; check revised target price

Shares of Bharat Dynamics Ltd (BDL) slumped in Friday's early trade, sliding 8.44 per cent to hit a low of Rs 1,175.05. Today's drop in the stock price came after the defence PSU reported weak numbers in the fourth quarter (Q4 FY26).

"Bharat Dynamics' results were weaker than our estimates, with execution impacted by delays in the supply of radars, seekers, and other components for Akash and Astra Mk1 missiles from external vendors," Motilal Oswal Financial Services Ltd (MOFSL) stated.

"Revenue declined 73 per cent YoY to Rs 480 crore in Q4 FY26. Gross margin remained strong at ~62.4 per cent in Q4 FY26. However, due to weaker execution, operating deleverage resulted in EBITDA margin being lower at 11.5 per cent vs. our estimate of 23.8 per cent. Absolute EBITDA declined 82 per cent YoY to Rs 55.2 crore. Weak execution and margin contraction led to PAT declining 59 per cent YoY to Rs 110 crore (66 per cent below our estimate). For FY26, revenue/EBITDA/PAT declined 27 per cent/53 per cent/24 per cent YoY to Rs 2,440 crore/220 crore/420 crore, while EBITDA margin contracted 500bp YoY to 9.1 per cent," the brokerage also said.

MOFSL downgraded the stock and reduced its target price. "We, thus, cut our FY27/FY28 earnings by 25 per cent/28 per cent and downgrade the stock to Neutral with a revised TP of Rs 1,150 (vs. Rs 1,500 earlier), based on 42x Jun'28E EPS. The stock is currently trading at 70.5x/48.1x/38.1x on FY27/FY28/FY29 EPS. We believe it is prudent to await a sustained ramp-up in execution and improved supply-side visibility," it further stated.

Nuvama Institutional Equities also noted that BDL continued the weak execution trend into Q4 FY26, with revenue, EBITDA and PAT missing Street estimates. "In our view, the weak performance was driven by supply-chain disruptions linked to the West Asia conflict and adverse product mix," it said.

"Downgrade to 'REDUCE' on continued execution slippages and weak margin recovery, which shall keep near-term earnings recovery elusive despite a strong backlog. We cut FY27E/28E EPS by 48 per cent/40 per cent and value the stock at 40x FY28E EPS, yielding a revised TP of Rs 1,150 (versus Rs 1,900 earlier). The stock trades at 70x/45x FY27E/28E EPS at CMP," Nuvama further stated.

Meanwhile, Choice Institutional Equities kept its 'Buy' rating on the counter with a target price of Rs 1,500. "We have recalibrated our estimate to factor in the weaker base, while maintaining a strong growth trajectory over the next two years," it added.