- Our view
- Unrated
- Price then
- INR 1,966/-
- Market cap then
- INR 72,072 Cr.
Bharat Dynamics Ltd. (BDL) manufactures guided weapons systems and other defence equipment for Indian defence forces. The note leaves the stock Unrated, with no target price, and highlights its INR 22,700 Cr. order book, export-led FY25 revenue growth and the possibility of improved operating margins. Margin pressure, raw-material supply and working-capital needs remain important risks.
About Bharat Dynamics
Incorporated in 1970 in Hyderabad, Bharat Dynamics is a Government of India strategically important prime production agency for guided weapons systems for Indian defence forces. It also makes underwater weapons systems and surface-to-air missiles, and refurbishes vintage defence equipment for the Indian Army. It has three existing facilities: one in Vishakhapatnam (AP) and two in Telangana; three more are planned, in Maharashtra, UP and Telangana.
Investment Rationale
- Large order book: Order book stood at INR 22,700 Cr. as on 01-Apr’25, up 16.8% versus 31-Mar’24 and equivalent to 6.8x FY25 sales. The note describes this as the highest order-book-to-sales ratio amongst peers.
- Recent contract wins: BDL received an INR 4,362 Cr. order to supply armaments to the Indian Armed Forces on 26-Mar’25 and an INR 2,960 Cr. order for medium-range surface-to-air missiles for the Indian Navy on 16-Jan’25. The note cites an approximate INR 20,000 Cr. order pipeline over the next 2-3 years, based on the Investor PPT dated 29-Nov’24.
- FY25 revenue recovery: Operating revenue increased 41.2% Y-o-Y to INR 3,345 Cr. after declining in FY23 and FY24. Exports contributed ~36% of FY25 revenue, at INR 1,200 Cr. versus INR 161 Cr. in FY24, while domestic revenue was INR 2,145 Cr. versus INR 2,208 Cr.
- Potential margin recovery: FY25 EBITDA margin fell to 14.1% from 22.6% in FY24, which the note attributes to higher raw-material costs, contract provisions and one-time adjustments. CRISIL expects operating margins of 17%-18% in the medium term, which the analyst expects to be achievable.
- Strategic role and capacity: BDL is described as the prime production agency for guided weapons systems for Indian defence forces. Three additional manufacturing facilities are planned, one each in Maharashtra, UP and Telangana.
Bharat Dynamics Key Financials
| Particulars | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|
| Operating Revenues | 2,817 | 2,489 | 2,369 | 3,345 |
| Rev. growth Y-o-Y % | -11.6% | -4.8% | 41.2% | |
| EBITDA | 726 | 408 | 537 | 472 |
| EBITDA % | 25.8% | 16.4% | 22.6% | 14.1% |
| PAT | 500 | 352 | 613 | 550 |
| PAT % | 17.3% | 13.3% | 22.4% | 14.9% |
| Debt | 7 | 5 | 4 | 2 |
FY25 revenue growth followed declines in FY23 and FY24. The note links the earlier de-growth to delays in receiving certain raw materials from foreign OEMs amid the Russia-Ukraine war and conflicts in the Middle East. It also reports CRISIL’s medium-term revenue growth expectation of 13%-15%, led by a stable order execution rate.
Valuation and Target Price
The report classifies Bharat Dynamics as Unrated and does not provide a target price or upside. It notes a CMP of INR 1,966/- as at 10-Jun’25 and a market capitalisation of INR 72,072 Cr.
- INR 1,966/-
- CMP (10-Jun’25)
- Unrated
- Report rating
Key Risks
- Contract margins: BDL bids on fixed-rate contracts, which can limit profitability; higher raw-material costs linked to global events may further compress margins.
- DRDO-related delays: The company relies on DRDO for technical modifications to orders. Delays in finalisation can make BDL liable for damages.
- Working capital: Operations require substantial working capital, with revenue dependent on customer clearances and products having a higher gestation period.
- Procurement and domestic demand: The note identifies domestic revenue expansion and easing raw-material procurement issues as monitorables for margin growth.
Order Book and Operations
The company serves domestic and export orders. The report’s peer table shows BDL’s order book at INR 22,700 Cr., with 16.8% growth, and its order-book-to-sales ratio at 6.8x. The note also records a CRISIL A1+ credit rating, reaffirmed on 19-Nov’24.
Revenue mix: FY25 exports were INR 1,200 Cr. compared with INR 161 Cr. in FY24. Domestic revenues were INR 2,145 Cr. in FY25 and INR 2,208 Cr. in FY24.
Peer Comparison
The report’s selected peer comparison places BDL’s order-book-to-sales ratio above those shown for the other listed peers below; its valuation multiples are also shown in the table.
| Company | Order Book (INR Cr.) | Order Book to Sales | PE Ratio | EV/EBITDA |
|---|---|---|---|---|
| BDL | 22,700 | 6.8x | 131.1x | 143.7x |
| BEL | 71,650 | 3.0x | 54.6x | 41.1x |
| HAL | 189,300 | 6.1x | 40.9x | 31.6x |
| Cochin Shipyard | 22,500 | 4.7x | 71.8x | 64.7x |
Order book as on Mar’25; market capitalisation as on 10-Jun’25. EV refers to Enterprise Value computed as M.Cap plus total Debt as on Mar’25 less cash & bank balances as on Mar’25.
Our View
BDL’s sizeable order book, export growth and planned capacity additions support the case for future revenue growth, while the note sees scope for operating margins to improve from FY25 levels. Fixed-price contracts, raw-material procurement and working-capital requirements remain key risks. The report’s verdict is Unrated, with no target price.
Standard disclosures
- Research Analyst has served as an officer, director or employee of subject company(ies): No
- We or our associates have received compensation from the subject company(ies) in the past 12 months: No
- We or our associates have managed or co-managed public offering of securities for the subject company(ies) in the past12 months: No
- We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months –No
- We or our associates may have received compensation or other benefits from the subject company(ies) or third party in connection with the research report –No
- We or our associates or Research Analyst or his/her relative's financial interest in the subject company(ies)- No
- Nature of financial interest in subject company, if any –Nil
- We, our associates or Research Analyst have actual/beneficial ownership of 1% or more securities of the subject company (ies) at the end of the month immediately preceding the date of publication of Research Report – No
- Subject company (ies) may have been client during twelve months preceding the date of distribution of the research report-No.
- We or our Associates or Research Analyst are engaged in market making of subject company – No
- By referring to any particular sector, Minerva Capital Research Solutions does not provide any promise or assurance of favorable view for a particular industry or sector or business group in any manner. The investor is requested to take into consideration all the risk factors including their financial condition, suitability to risk return profile and take professional advice before investing. Such representations are not indicative of future results.
- There are either no material conflict of interests or all existing and potential conflict of interest are disclosed herein.
Regulatory disclosures
Minerva Capital Research Solutions is an independent investment advisory firm founded by Nishant Gupta(SEBI registration no. INH000018896).
Registration granted by SEBI and certification from NISM in no way promise or guarantee that the research recommendation will provide any assured, minimum or risk-free return to the investors.
The research report serves as general information and does not account for individual investment goals, financial situations, or needs. Minerva Capital Research Solutions strives to provide reliable and comprehensive information, sourced from what are believed to be trustworthy channels. However, this information has not been independently verified by Minerva Capital Research Solutions or its analysts, and no guarantees are made regarding its accuracy or completeness. The opinions expressed in this report reflect the views of the research analyst at the time of publication and may change over time. Minerva Capital Research Solutions and its affiliates as on date of publication of this report may or may not hold any positions in the securities discussed. The views presented are general and do not consider individual risk tolerance or investment objectives; therefore, readers should seek independent professional advice before making investment decisions. Minerva Capital Research Solutions does not guarantee a favorable outlook for any specific industry or sector and urges investors to consider all relevant risk factors, including their financial circumstances, before investing. The analyst certifies that their views accurately represent their personal opinions on the companies discussed and that no part of their compensation is tied to specific recommendations made in this report. This material should not be interpreted as an offer or solicitation to buy or sell securities in jurisdictions where such offers would be illegal. Consequently, brokerage and investment services described herein are not available to Canadian or U.S. persons. Distribution outside India requires prior written consent. This Research Report assumes that the recipient will assume all risks associated with its contents. If there are any disagreements or dissatisfaction with this report or its disclaimer, the only recourse is to cease using it. Minerva Capital Research Solutions and its affiliates will not be liable for any direct or indirect losses resulting from the use of this report. Recipients are required to adhere to these restrictions. The material is for the personal use of authorized individuals and does not constitute a solicitation or offer to buy or sell any securities in jurisdictions where such actions would be illegal.
For any queries or grievances: Mr. Nishant Gupta | Email: nishant.gupta@mcapital.in | Contact Number: 8171433387 | Website: www.mcapital.in | Twitter: @Mcapital_In
Rating rationale
Minerva Capital Research Solutions endeavors to provide objective opinions and recommendations. Ratings are assigned to stocks according to their fair value vs current market price and then categorizes them as Buy, Hold, Reduce, Sell. The performance horizon is one year unless specified and fair value is defined as analyst’s valuation for a stock.
- Buy:> 15%
- Hold: -5% to 15%
- Reduce: -15% to -5%
- Sell: <-15%