Bharat Dynamics LTD Shantanu

Bharat Dynamics Ltd Page|1
SECTOR: Aerospace and Defense
BUY
Key Data
CMP INR1616
Target Price INR1838.80
Key Stock Data Market Cap (Cr.) No. of Shares
52 weeks High/Low
Rs. 59,244
2,48,158
Bharat Dynamics Ltd. 1795/450
Overview
Bharat Dynamics Limited (BDL) is one of the
leading defense PSUs in India engaged in the Shareholding Pattern
Mar23Mar24
manufacture of Surface to Air missiles (SAMs),
Anti-Tank Guided Missiles (ATGMs), Underwater
weapons, Launchers, Counter Measures Dispensing Promoters 74.93% 74.93%
System (CMOS) and Test Equipment. The FII 2.83% 2.95%
Company is engaged in the business of
refurbishment and life extension of stored and DII 14.10% 12.39%
deployed missiles. It is the sole manufacturer in Public 8.15% 9.72%
India for SAMs, torpedoes, ATGMs. Currently, it is
also the sole supplier of SAMs and ATGMs to the
Indian Armed Forces.
Profitability Ratios
1. Return on Capital Employed (ROCE) – 11.34%

 A ROCE of 15.41% indicates that Bharat Dynamics Ltd. generates a return of
15.41% on the capital it employs. This is a strong indicator of efficient capital
use, suggesting the company is effectively generating profits from its capital
investments.
2. Return on Equity (ROE) – 16.84%

 An ROE of 16.84% signifies that Bharat Dynamics Ltd. if generating a profit of
16.84% for every unit of shareholders equity. This is a solid return, indicating
effective management and profitable use of equity capital.
Valuation Ratios
1. Price to Earnings (P/E) Ratio – 96.7

 A P/E of 96.7 suggests that the market has high expectations for Bharat
Dynamics Ltd. future growth. This is quite high, indicating that the stock might
be
overvalued or that investors expect significant future earnings growth.
2. Book Value per Share – Rs. 99.2
 Knowing the book value helps in assessing the company’s valuation. If the stock
price is significantly higher than the book value, it might indicate over valuation,
unless justified by high growth prospectus.
3. Dividend Yield – 0.28%
 A Yield of 0.57% is relatively low, suggesting that Bharat Dynamics Ltd. may be
retaining most of its earnings for reinvestment rather than paying high dividends.
This could be acceptable if the company is focusing on growth and expansion.
Growth Ratios
1. Compounded Sales Growth (5 Years) – -5%

 A 5-year compounded sales growth of -5% indicates that there is slight decline
in the sales of the company, reflecting a lower turnover on account of supply
chain disruptions and change in product mix.
2. Compounded Profit Growth (5 Years) – 8%
 A 5-year compounded profit growth of 8% is impressive, demonstrating that
Bharat Dynamics Ltd. has been able to grow its profits at a significant rate,
likely due to operational efficiency.
3. Stock Price CAGR (5 Years) – 62%
 A 5-year stock price CAGR of 62% is exceptionally high, indicating theta Bharat
Dynamics Ltd. stock has delivered substantial returns to its investors over this
period. This reflects strong investor confidence and significant appreciation in
the stock’s market value.
Growth and Profitability
Annual Performance (Rs.Cr.)

3500 30.00%
3000 25.00%
2500
20.00%
2000
15.00%
1500
10.00%
1000
500 5.00%
0 0.00%
Year 2020Year 2021Year 2022Year 2023Year 2024
Revenue Net Income Net Margin %
Key Financial Ratios and Metrics
Metric Value
 Stock P/E 96.7
 Book Value Rs. 99.2
 Dividend Yield 0.28%
 ROCE 11.34%
 ROE 16.84%
 Face Value Rs. 5
 Compounded Sales Growth (5 Years) -5%
 Compounded Profit Growth (5 Years) 8%
 Stock Price CAGR (5 Years) 62%
 Return on Equity (5 Years) 16%
Key Charts
Annual Revenue (Rs.Cr.)

3500
3000
2500
2000
1500
1000
500
0
Year 2020 Year 2021 Year 2022 Year 2023 Year 2024
Turnover
Profit After Tax (Rs.Cr.)

700
600
500
400
300
200
100
0
Year 2020 Year 2021 Year 2022 Year 2023 Year 2024
Profit After Tax

Summary
 Profitability: - Bharat Dynamics Ltd. exhibits strong profitability with high ROCE
(11.34%) and ROE (16.84%), indicating effective use of capital and equity to
generate profits.
 Valuation: - The high P/E ratio (96.7) suggests that the stock might be overvalued,
but thus could be justified if the company continues its strong growth performance as
Industry P/E is (94.53). The book value per share (Rs.99.2) provides a benchmark for
assessing the stock’s market price.
 Dividend: - The low dividend yield (0.28%) implies that Bharat Dynamics is
retaining earnings for growth, which aligns with its high growth metrics.
 Growth: - Impressive 5-year compounded profit growth (8%) demonstrates robust
performance and effective management. The Stock price CAGR of 62% over five
years highlights significant stock market returns, reflecting investor confidence and
strong
market performance.
Key Positives
 Book value in last 3 years is trending up.

 Excellent QoQ EPS growth.
 During the past twelve months, the company has given a strong Net Margin 25.86%.
 All key trailing Twelve Months Margin growing by 15%.
 Annual Net Profit in last 3 years is trending up.
 EBITDA is continuously increasing for last 3 Years.
 Steady growth in EPS for last four quarters.
 Good Return on Capital Employed of 16.85.
 Good Return on Equity of 18.23% is achieved by the company.
 YoY Net Margin Jump by 82.80%.
 Steady increase in Total Assets for last 3 Years.
Key Negatives
× Very Expensive – Price to intrinsic value of 4.54.

× Price to Earning Ratio is 100.56 and EV to EBITDA is 76.36 suggesting that it is
very expensive.
× Price to Book Ratio of 18.33 suggesting that it is very expensive.
× Very low dividend yield of 0.29%.
× Operating Cash flow decreasing for last 3 year.
× Company’s debt has increased with decreasing revenue.
Projects
 BDL handed over the first Radio Frequency (RF) Seeker of Akash–Next Generation
Weapon System produced at BDLs newly commissioned State-of-the-art Seeker
Facility Centre (SFC) to DRDO.
 BDL received supply order of ATGM order worth Rs 750 Cr from Indian Army.
 Limited Series Production clearance has been received from DRDO for Astra
Mark-I Missile System.
 BDL received supply order of upgraded version of Akash Missiles worth about
Rs.247 Crore from Army.
 BDL received supply order for LBRM worth about Rs.254 Crore and ULPGM for
about Rs.105 Crore.
 Order Book as of H1FY24

Company received new orders worth ~Rs. 1659 Cr in Fy24 taking their order book to Rs.
20766 Cr in H1FY24. The company has a revenue target of Rs. 3200 Cr. BDL's Export
Order position as of H1FY24 was ~Rs. 2600 Cr.
 R&D and Capex

The company plans to spend 2 - 4% of sales in R&D in FY24 (6.11% in FY23). It also
plans to spend Rs. 100 Cr on capex in FY24 (Rs.114 Cr in FY23).
Key Financials
Financial Summary
(Values in crores)
INR FY19 FY20 FY21 FY22 FY23 FY24E FY25E

Crore
Net 3205.3 3211.2 2008.4 2928.6 2644.8 2731.1 2796.54
Revenue
EBITDA 758.1 843.5 439.3 837.3 563.6 898.4 1043.32
PAT 422.6 534.9 257.8 499.9 352.2 612.7 751.29
EPS(INR) 23.1 29.2 14.1 27.3 19.2 16.7 17.55
Valuations Summary
FY19 FY20 FY21 FY22 FY23 FY24E FY25E

P/E 8.3 13.1 21.6 16.9 35.6 69.2 111.54
EV/EBITDA 4.7 6.4 11.6 9.2 19.8 42 69.22
P/BV 2.5 1.9 2.6 3.1 5.5 10 13.82
ROCE (%) 26.50% 22.16% 10.02% 18.75% 7.52% 11.33% 11.42%

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Bharat Dynamics Ltd Page|1

SECTOR: Aerospace and Defense

1. Return on Capital Employed (ROCE) – 11.34%

2. Return on Equity (ROE) – 16.84%

1. Price to Earnings (P/E) Ratio – 96.7

1. Compounded Sales Growth (5 Years) – -5%

Growth and Profitability

Annual Performance (Rs.Cr.)

Revenue Net Income Net Margin %

Key Financial Ratios and Metrics

Annual Revenue (Rs.Cr.)

Profit After Tax (Rs.Cr.)

Profit After Tax

 Book value in last 3 years is trending up.

× Very Expensive – Price to intrinsic value of 4.54.

 Order Book as of H1FY24

 R&D and Capex

INR FY19 FY20 FY21 FY22 FY23 FY24E FY25E

FY19 FY20 FY21 FY22 FY23 FY24E FY25E

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