Bharat Dynamics stock: Why MOSL suggests to buy the defence stock at lower levels 

Bharat Dynamics Ltd shares rose over a per cent in early deals on Thursday after brokerage Motilal Oswal initiated  coverage on the defence stock. Bharat Dynamics currently holds an order book of Rs 22,700 crore and a prospect pipeline of Rs 50,000 crore. However, revenue of the prominent player in missile technology has been adversely impacted by supply chain disruptions and difficulties in procuring essential components through imports from Russia and Israel. The brokerage believes these issues are beginning to resolve and it expects a rebound in revenue growth. 

Meanwhile, Bharat Dynamics shares rose 1.5% to Rs 1998 in early deals on BSE today. Market cap of the firm stood at Rs 71,406 crore. 

The defence stock opened higher at Rs 1979.5 on BSE. Total 0.35 lakh shares of the firm changed hands amounting to a turnover of Rs 6.84 crore on BSE. 

Bharat Dynamics stock stands higher than the 10 day, 20-day, 30 day, 50-day, 100-day, 150 day and 200-day moving averages. The defence stock has gained 260 per cent in two years and risen 444 per cent in three years. 

"We estimate BDL’s revenue CAGR at 35% over FY25-28. With ongoing investments in backward integration and an improved share of indigenized products, we expect BDL’s EBITDA margin to remain strong at 24-26%. This is anticipated to drive an EBITDA/PAT CAGR of 64%/51% over FY25-28," said Motilal Oswal.

The stock currently trades at 70x/52x/38x P/E on FY26/FY27/FY28 estimates. 

"We initiate coverage on the stock with a Neutral rating and a TP of Rs 1,900 based on 42x Sep’27E P/E. We like the business model of BDL and its ability to scale up its revenues and order book in current scenario, however, with fair valuations, we would look for lower price points to enter the stock, added the brokerage. 

Bharat Dynamics is engaged in the manufacturing of missiles and allied defence equipments. The company provides majority of its goods and services to the Indian Armed forces and government of India.