Motilal Oswal Maintains BUY on Bharat Dynamics, Revises Target Price to ₹2,000 on Strong Order Book and Execution

Motilal Oswal's latest research report on Bharat Dynamics Limited (BDL) highlights a significant ramp-up in execution during the second quarter of the fiscal year 2026 (2QFY26), driven by the easing of supply chain constraints. While margins were impacted by the specific mix of projects undertaken during the quarter, the company secured a substantial order inflow of INR 20 billion for Invar anti-tank missiles.

BDL is poised to benefit from continued momentum through emergency procurement initiatives, ongoing orders for QRSAM (Quick Reaction Surface-to-Air Missile), follow-on orders for the Astra missile from HAL (Hindustan Aeronautics Limited), and VSHORADS (Very Short Range Air Defence System), among others. The company boasts a formidable order book totaling INR 235 billion.

With a strategic focus on efficient execution, Motilal Oswal projects revenue, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), and PAT (Profit After Tax) to grow at impressive rates of 35%, 64%, and 51% respectively, over the fiscal years 2025 to 2028 (FY25-28).

The stock is currently trading at a Price-to-Earnings (P/E) multiple of 40.1x and 29.2x its estimated earnings for FY27 and FY28, respectively. The brokerage firm maintains its BUY recommendation on BDL, revising its target price to INR 2,000. This new target is based on a valuation multiple of 42x the estimated Earnings Per Share (EPS) for December 2027 (Dec'27E).

Outlook: Motilal Oswal affirms its financial estimates for BDL, anticipating further improvements in execution and margins in the upcoming quarters. The BUY rating and target price of INR 2,000, based on 42x Dec'27E EPS, are maintained.

Impact

This news is highly relevant for investors interested in the Indian defense sector and Bharat Dynamics Limited specifically. The reiterated BUY rating and increased target price from a reputable brokerage firm like Motilal Oswal can positively influence investor sentiment and potentially drive the stock price. The strong order book and growth projections suggest a positive outlook for the company's financial performance, which is crucial for stock market investors. Rating: 8/10

Difficult terms explained:

• 2QFY26: This refers to the second quarter of the Indian fiscal year 2026, which typically runs from July to September 2025.
• Supply chain issues: Problems in the flow of goods and services, such as delays in raw material delivery or manufacturing bottlenecks.
• Execution ramp-up: An increase in the pace and efficiency at which a company completes its projects or fulfills its orders.
• Margins: The difference between revenue and costs, indicating profitability. Lower margins mean less profit per unit sold or service provided.
• Project mix: The combination of different types of projects a company is working on, which can affect overall profitability due to varying cost and revenue structures.
• Order inflow: The value of new orders received by a company during a specific period.
• Invar anti-tank missiles: A type of anti-tank missile designed for use against armored vehicles, likely with advanced guidance systems.
• Emergency procurement: The process of acquiring necessary equipment or supplies quickly to meet immediate operational needs, often bypassing standard lengthy procedures.
• QRSAM: Acronym for Quick Reaction Surface-to-Air Missile, a short-range missile system designed for rapid deployment against aerial threats.
• HAL: Hindustan Aeronautics Limited, an Indian state-owned aerospace and defense company.
• VSHORADS: Acronym for Very Short Range Air Defence System, a portable missile system used to defend against low-flying aircraft and drones.
• Order book: The total value of confirmed orders received by a company that are yet to be completed.
• EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure of a company's operating performance.
• PAT: Profit After Tax. This is the company's net profit after all expenses and taxes have been deducted.
• FY25-28: Fiscal Years 2025 through 2028. Fiscal years often differ from calendar years.
• P/E: Price-to-Earnings ratio. It compares a company's current share price to its per-share earnings. A high P/E can indicate high growth expectations or that a stock is overvalued.
• FY27E / FY28E: Estimates for the fiscal years 2027 and 2028.
• TP: Target Price. The price at which a stock analyst expects the stock to trade within a specific timeframe.
• Dec'27E: An estimate for the earnings per share as of December 2027.
• EPS: Earnings Per Share. A company's net profit divided by the number of outstanding shares.