Bharat Dynamics: Nuvama Sees 36% Upside, Citing Strong Orders and Eased Supply Chain Woes
Bharat Dynamics Shares Dip Despite Strong Q4 Performance
Shares of state-run defense company Bharat Dynamics Ltd. took a slight dip on Wednesday, May 28, despite reporting strong results for the March quarter. The stock fell as much as 6% after the company announced its Q4 performance, which was released after market hours on Tuesday.
Strong Revenue Growth, Mixed Profitability
For the fourth quarter, Bharat Dynamics saw its revenue more than double to ₹1,777 crore from ₹854 crore in the same quarter last year. However, Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) fell 5.5% to ₹299 crore from ₹316 crore during the year-ago period. EBITDA margin contracted year-on-year to 16.83% from 37.04%, and net profit also experienced a 5.5% decrease compared to the previous year.
Nuvama Remains Bullish, Raises Price Target
Despite the mixed Q4 performance, brokerage firm Nuvama Institutional Equities maintained a ‘Buy’ rating on Bharat Dynamics and significantly raised its price target by 36% to ₹2,250 from ₹1,650 earlier.
Reasons for Optimism
- Strong Topline Growth: Nuvama highlighted Bharat Dynamics’ strong topline-driven Q4FY25 performance, anticipating continued momentum into the next fiscal year.
- Robust Order Book: Order inflows for FY25 reached ₹6,700 crore, boosting the order backlog to ₹22,800 crore, providing strong revenue visibility over the next three to four years.
- Revenue Growth Projection: Nuvama believes BDL is well positioned to achieve a revenue CAGR of over 60% during FY25–27E.
- Easing Supply Chain Issues: The brokerage noted that Bharat Dynamics had previously faced supply chain disruptions due to its reliance on war-affected regions like Russia and Israel, but these challenges have now eased.
Key Triggers for Further Upside
Nuvama identified sustained or improved execution momentum and an improvement in operating profit margins (OPM) as key triggers for further upside in Bharat Dynamics’ share price.
Stock Performance
Shares of Bharat Dynamics were trading with losses of 2.47% at ₹1,911.45. However, the stock has still risen nearly 70% so far in 2025.
