Comments
ICICI Securities
Bharat Dynamics (Buy)
Target: ₹600
CMP: ₹372.7
Bharat Dynamics (BDL) is a leading Defence PSU in India manufacturing guided missile systems. It has a product portfolio consisting of Surface-to-Air Missiles (SAMs), Anti-Tank Guided Missiles (ATGMs), underwater weapons, launchers, counter-measures, and test equipment. BDL also undertakes life-extension as well as refurbishment work on missile systems.
Currently, it is the key domestic supplier of SAMs and ATGMs to the Indian Armed Forces. While July 2021 order book stands at ₹8,700 crore (2.6x book-to-bill), management has reiterated the possibility of order book expanding to ₹23,000 crore over next two years. Large part of the accretion is expected from Akash 3rd and 4th squadrons (Indian Army) and ‘Astra beyond visual range' (air-to-air missiles). Also, we believe BDL has the potential to benefit from India’s focus on defence exports. We initiate coverage on Bharat Dynamics with a ‘Buy’ rating and DCF-based target price of ₹600/share (implying P/E of 15x FY23). Our biggest confidence in the valuation comes from the order book, which is expected to cross ₹23,000 crore by FY23.
Key risks include delay in execution, higher LDs accruing because of the same, lower than expected order book accretion and higher material costs.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.