The brokerage believes that Bharat Dynamics’ growth during the quarter was driven by a strong order book and easing supply chain issues. However, negative operating leverage in a seasonally weak quarter, drove the operational loss and negative margins, although it narrowed compared to last year.
With a strong order book of nearly ₹23,300 crore, Motilal Oswal expects the execution to scale up further in the coming quarters, particularly from Akash, Astra, Mk1, MRSAM and armament projects. It also expects Bharat Dynamics to benefit from a strong prospect pipeline of nearly ₹50,000 crore and an emergency procurement programme.Motilal Oswal is expecting Bharat Dynamics’ revenue and EBITDA to grow at a Compounded Annual Growth Rate (CAGR) of 35% and 64% respectively over financial year 2025-2028, primarily driven by a sharp scale-up in execution due to moderating supply chain issues.
EBITDA margin is likely to remain between 23.8% and 24.7% and 25.5% over the next three years, aided by various indigenisation efforts taken by the company and lower provisions.With an estimated annual capex of ₹2,000 crore, ₹2,500 crore and ₹3,000 crore in FY26, FY27 and FY28, respectively, and comfortable working capital, the brokerage said it expects a 51% CAGR in PAT of FY25-28.
Motilal Oswal said key risks for the company include a decline or reprioritisation of the Indian defence budget, terminating of existing contracts or failure to succeed in tendering projects, changes in procurement rules and regulations of the ministry of defence and the government, and supply-chain-related issues.
Out of the 11 analysts that have coverage on Bharat Dynamics, five of them have a “buy” rating, four say “hold”, while two have a “sell” recommendation on the stock.
Shares of Bharat Dynamics were up 4.4% at ₹1,551.4 apiece at 11.15 am on Wednesday. The stock has gained 36.9% this year, so far.
Also Read: Premier Explosives shares gain 12% after it reports strong revenue, order book growth
