Motilal Oswal see 4% draw back for Bharat Dynamics, begins protection with impartial name amid lofty valuations

Motilal Oswal has initiated protection on Bharat Dynamics Ltd with a ‘impartial’ ranking and a goal value of Rs 1,900, about 4% beneath its present market worth, cautioning that the inventory’s sharp run-up leaves little room for near-term upside.

Whereas lauding the defence producer’s sturdy order e-book, export momentum, and earnings potential, the brokerage mentioned it might “search for lower cost factors to enter the inventory” given the demanding valuations.

Shares of Bharat Dynamics fell 2.2% on Thursday to Rs 1,941.25 on the BSE.

Motilal Oswal expects a pointy scale-up in execution as provide chain headwinds ease, driving a 35% income CAGR and 51% PAT CAGR over FY25–28. “We just like the enterprise mannequin of BDL and its potential to scale up its revenues and order e-book in present state of affairs,” the brokerage mentioned, however famous that the inventory is already buying and selling at 70x/52x/38x FY26/FY27/FY28 earnings, valuations it considers honest.

The goal value of Rs 1,900 is predicated on 42 occasions the corporate’s estimated earnings for September 2027.

BDL’s EBITDA margins are anticipated to stay robust at 24–26%, supported by backwards integration and the next share of indigenized merchandise. The corporate has indigenized 80–90% of a number of key missile platforms and is working with DRDO on about 40 improvement packages.

Export momentum and order pipeline

BDL’s export income surged to Rs 12 billion in FY25 from Rs 1.6 billion the earlier yr, buoyed by demand for its Akash, Astra, and Helina missile methods, amongst others. The corporate has acquired export approvals for the Akash Weapon System to 9 international locations and is attracting additional curiosity for torpedoes and air-to-air missiles, the brokerage famous.
Its order e-book at present stands at Rs 227 billion, with a possible addressable market of Rs 500 billion over the following few years, together with large-ticket orders such because the Fast Response Floor-to-Air Missile (QRSAM), Astra Mk1, and the indigenous long-range SAM system underneath Venture Kusha.

Defence spending tailwinds

The brokerage highlighted a supportive macro backdrop, with NATO’s revised 5% defence spending goal by 2035 and India’s current Defence Acquisition Council approvals price Rs 1 trillion. These developments are prone to develop the addressable marketplace for home defence producers.

Motilal Oswal additionally pointed to BDL’s diversification into new areas comparable to drone-delivered payloads, cruise missile engines, and superior seekers, which might help long-term progress.

Additionally learn | Ola, Paytm, Swiggy tumble as much as 50% in 2025: Are your loss-making tech bets nonetheless price it?

Regardless of the promising outlook, the brokerage flagged dangers together with reprioritisation of India’s defence price range, delays in execution, and any adjustments in procurement coverage. Provide chain dependencies, although easing, stay a sensitivity given BDL’s integration with world distributors.

(Disclaimer: Suggestions, ideas, views and opinions given by the specialists are their very own. These don’t symbolize the views of the Financial Instances)