ElaraCapital has revised its outlook on Bharat Dynamics Ltd (BDL) shares, reducing its target price while maintaining an 'Accumulate' rating. The brokerage cited execution delays in surface-to-air missile (SAM) projects as the primary reason for the adjustment, impacting BDL's recent sales and margins.
Execution Delays and FY27 Recovery Hopes
According to ElaraCapital, BDL experienced a negative surprise across all fronts due to setbacks in SAM project execution. These delays, attributed to post-testing observations currently being incorporated, have postponed deliveries. However, the brokerage views these issues as transient, anticipating a full recovery by the fiscal year 2027 (FY27).
While BDL missed its sales CAGR target of 30 percent for FY26, the company boasts a substantial closing order book of approximately Rs 26,000 crore, slated for execution over the next three to four years. This robust order visibility underpins ElaraCapital's continued optimism for improved sales growth moving forward.
Strategic Order Pipeline and New Product Development
ElaraCapital expects BDL to be a significant beneficiary of a strong order pipeline. This includes major projects such as the Quick Reaction Surface-to-Air Missile (QRSAM) program, valued between Rs 10,000-12,000 crore, as well as orders for Astra missiles, Medium Range Surface-to-Air Missiles (MRSAM) for the Navy, and export orders for Akash missiles. Additionally, smaller-ticket orders for Nag, Helina, and Dhruvastra missiles contribute to the company's future prospects.
Further bolstering its long-term growth, BDL has developed an unmanned aerial vehicle (UAV)-launched precision-guided missile (ULPGM). This innovative product, designed to launch missiles via a returning drone, is expected to generate strong demand. BDL is also actively collaborating with the Defence Research and Development Organisation (DRDO) on new product development to drive revenue expansion.
Brokerage Sentiment Mixed
Despite ElaraCapital's 'Accumulate' recommendation, other financial institutions have taken a more cautious stance. Motilal Oswal Financial Services Ltd (MOFSL) has downgraded BDL stock to 'Neutral', while Nuvama Institutional Equities has moved to a 'Reduce' rating. As of Wednesday's trade, BDL shares were trading 1.38 percent higher at Rs 1,222.90.