Bharat Dynamics Ltd (BDL), the state-run missile manufacturer under the Ministry of Defence, has caught investor attention amid India’s robust defence manufacturing push and rising geopolitical tensions. Leading brokerage Motilal Oswal Financial Services (MOSL) has advised buying the stock on dips, citing strong order book visibility, Make in India tailwinds, and valuation comfort after recent corrections.
Key Factors Behind MOSL’s Positive Outlook On Bharat Dynamics
1. Strong Order Book Pipeline
BDL’s current order book stands at approximately ₹19,200 crore, translating to a revenue visibility of nearly 5x its FY24 revenues. This pipeline includes:
- Akash missile systems
- Anti-Tank Guided Missiles (ATGM)
- Surface-to-Air Missile projects (SAMs)
- New generation Amogha-III missile orders expected soon
MOSL analysts emphasised that with the government’s focus on indigenisation of missile systems and restrictions on imports under the Defence Negative List, BDL will remain the prime beneficiary.
2. Robust Financials
| Particulars (₹ crore) | FY24 | FY25E | YoY Change (%) |
|---|---|---|---|
| Revenue | 3,184 | 4,050 | +27% |
| EBITDA | 715 | 950 | +33% |
| PAT | 582 | 775 | +33% |
| EPS (₹) | 31.8 | 42.3 | +33% |
| Order Book | 19,200 | 23,000 | +20% |
Source: MOSL estimates
The expected revenue growth coupled with stable margins above 20% and strong cash flows strengthen the investment thesis.
3. Valuation Comfort
BDL shares have corrected from their 52-week highs of ₹1,615 in March 2025 to around ₹1,320 recently. MOSL’s note highlights:
- At the current price, BDL trades at ~30x FY25E earnings, below its historical premium multiples.
- The brokerage has a buy rating with a target price of ₹1,600, implying a potential upside of over 20%.
4. Strategic Defence Sector Positioning
Bharat Dynamics, as India’s sole missile manufacturer, is strategically critical for:
- Defence PSUs’ supply chain integration under DRDO
- Upcoming Amogha-III and Akash NG missile induction
- Export potential to friendly nations under India’s defence diplomacy initiatives
Recent Developments Driving Stock Outlook
| Date | Announcement | Impact |
|---|---|---|
| April 2025 | Signed MoU with DRDO for Next Gen missiles | Enhances R&D pipeline |
| March 2025 | Declared ₹15/share interim dividend | Strengthens investor confidence |
| February 2025 | Received ₹2,500 crore Akash missile order | Bolsters order book visibility |
| January 2025 | Reported 42% YoY jump in Q3 net profit | Positive earnings momentum |
5. Government Policy Tailwinds
The Defence Ministry has announced a ₹1.72 lakh crore capital allocation for FY26, with a major focus on missile systems, UAVs, and indigenous weapons. BDL is expected to secure substantial orders under:
- Defence Acquisition Procedure (DAP) indigenous categories
- DRDO development-cum-production partners (DCPP) route
Brokerage View
Motilal Oswal analysts wrote:
“BDL is well placed to benefit from India’s defence indigenisation and export initiatives. We recommend accumulating the stock at lower levels to benefit from upcoming orders and earnings upgrades.”
Technical Analysis
Technical experts tracking the stock observed:
- Support: ₹1,250 – ₹1,300 zone
- Resistance: ₹1,420 – ₹1,500
- Momentum Indicator RSI: Near 40, indicating an attractive entry zone
Risks To Watch
Despite strong fundamentals, MOSL cautioned about:
- Execution delays in high-value orders
- Export approvals taking longer due to geopolitical clearances
- Margin pressure due to raw material import cost volatility
Peer Comparison In Defence PSU Space
| Company | Market Cap (₹ crore) | FY25E Revenue (₹ crore) | P/E (x) | Key Strength |
|---|---|---|---|---|
| Bharat Dynamics | 24,000 | 4,050 | 30 | Missile manufacturing |
| Bharat Electronics | 100,500 | 20,800 | 32 | Radar & avionics |
| HAL | 197,000 | 29,500 | 25 | Aircraft manufacturing |
| Mazagon Dock | 30,200 | 7,800 | 17 | Submarine & shipbuilding |
Long-Term Outlook
India’s target to achieve ₹1.75 lakh crore defence production by 2025, including ₹35,000 crore exports, aligns with BDL’s core missile and ammunition product portfolio, positioning it for:
- Higher order inflows from Army, Navy, and Air Force
- Expansion in export markets under IDEX framework
- Better margins through indigenisation of critical components
Conclusion
Motilal Oswal’s recommendation to buy Bharat Dynamics at lower levels is rooted in strong fundamentals, policy tailwinds, and a reasonable valuation post-correction. Investors with a medium to long-term horizon can consider accumulating the stock for potential compounding returns driven by India’s indigenous missile ecosystem growth.
Disclaimer
This news content is for informational purposes only and does not constitute investment advice. Readers should consult their financial advisors before making any investment decisions.
