Motilal Oswal gave a Neutral rating to Bharat Dynamics with a target price of Rs 1130. The company saw a revenue surge from Akash and Astra MK 1 orders. However, higher import costs hurt margins. Analysts expect strong revenue growth ahead but kept the rating steady due to disappointing margin performance.
Motilal Oswal's research report on Bharat Dynamics
Bharat Dynamics (BDL) reported a surge in revenue, driven by execution of pending orders of Akash and Astra MK 1, which were delayed over the past 1-2 quarters. This execution has led to a sharp revenue beat vs. our estimate. However, due to a spike in import content, EBITDA margin contracted both YoY and QoQ. Order inflows were strong for BDL in 1HFY27. Going forward, with further ramp-up in execution, we expect revenue growth to be strong.
Outlook
However, we now bake in lower margins in our estimates and arrive at our revised TP of INR1,130 based on a slightly lower multiple of 40x two-year forward earnings (vs. 42x earlier), as margin performance continues to disappoint. We reiterate our Neutral rating on the stock.