Bharat Dynamics (BDL) is a leading defence PSU and debt-free company. This defence stock witnessed stellar growth in last week’s trading session of November 2024, rising by more than 15% on the NSE. Overall, BDL closed November month on a bullish note. The stock is currently near Rs 1,150 levels, and there is room for further buying. Brokerage Elara Capital has upgraded its stance on BDL to BUY from earlier rating of SELL, for a target price of Rs 1,230. BDL is expected to be among the key beneficiaries of a robust order pipeline. Also, the stock has underperformed, and a fresh jump is seen ahead.

BDL Share Price:

After market hours of November 29, the last trading day of the month, BDL stock closed at Rs 1,150.15 apiece on NSE, down by 1.7% with a market cap of Rs 42,160.19 crore. Despite the latest drop, BDL share price ended the trading week from November 25th to 29th, on a strong bullish note with gains of up to 15.2%. This led the entire month to be positive for BDL.

BDL exited November 2024 month with the upside of over 6%. YTD, the stock is up by 33.2%. All-time gains in BDL are about 488.25%.

BUY BDL Stock Price:

According to Elara Capital’s latest note, BDL witnessed a soft Q2 YoY but better QoQ owing to supply chain issues impacting execution. However, with the indigenization of components, and change in customer and product mix, the company focuses on execution.

Elara is expecting BDL to be the key beneficiary of a robust order pipeline, which includes the quick reaction surface-to-air missile (QRSAM) worth INR 200-250bn, MRSAM for the Navy, large order for the anti-tank guided missile (ATGM), exports order for the Akash, and smaller ticket orders for the Nag, the Helina and the Dhruvastra missiles.

Also, the company has the unmanned aerial vehicle launched precision-guided missile (ULPGM), which is likely to garner strong demand due to its unique nature of launching missiles through a drone, which returns. The company is engaged with the Defence Research and Development Organisation (DRDO) in developing new products. These steps would help propel revenue growth, as per Elara.

Furthermore, Elara predicts BDL’s margin to rebound in H2, led by execution ramp-up and execution of export orders.

On the valuation, Elara’s note said, “We lower our FY25E EPS by 12% due to lower top line in H1 and retain FY26E EPS. We raise our TP to INR 1,230 from INR 1,100 on 37x (from 35x) September FY26E P/E, due to this being the last quarter of pain, with H2 slated to see a strong recovery driven by robust execution.”

Additionally, the brokerage added, “We upgrade to Buy from Sell, as BDL is a key beneficiary of a robust order pipeline for domestic as well as export markets, being the only DPSU missile manufacturer, and the stock underperforming the Nifty by 21% for the past three months vs the Index at 3%. We expect an earnings CAGR of 48% during FY24-27E with an average ROE of 23% during FY25-27E. Key risks to our call could be a slowdown in defence capex and order inflows.”

Bharat Dynamics (BDL) Corporate Actions:

BDL has not carried any bonus issue, however, in 2024, the stock split in the ratio of 1:2. The face value of Rs 10 each of BDL has been split to Rs 5 each since May 24, 2024. This stock split was the first by BDL.

Meanwhile, BDL has delivered about 13 dividends since September 2018, as per Trendlyne data. In 12 months, the company delivered about Rs 9.70 per share dividend. Currently, it has a dividend yield of 0.45%.

Headquartered in Hyderabad, Bharat Dynamics Limited (BDL), was incorporated on 16 July 1970 as a Public Sector Undertaking under the Ministry of Defence, Government of India to be the manufacturing base for guided missile systems and allied equipment for the Indian Armed Forces.