State-run defence equipment manufacturer Bharat Dynamics Ltd. has pared its revenue guidance to ₹2,900 crore to ₹3,000 crore from ₹3,200 crore earlier for financial year 2024, according to a note from brokerage firm Elara Capital. The revenue guidance was pared owing to supply chain concerns from Israel.
However, the company expects to touch ₹4,000 crore in revenue in financial year 2025 and hit the ₹5,000 crore mark in financial year 2026, led by the execution of the Astra Mk1 Beyond Visual Range Air-to-Air missile, ATGM, Akash and exports.
The company has also cut the higher end of the EBITDA margin guidance to 20% to 21% from 20% to 23% earlier.
Bharat Dynamics' management has indicated that while supply chain concerns led by the Russia-Ukraine war have largely mitigated, complete normalisation may be seen by the first quarter of financial year 2025. "However, supplies from Israel may only begin to improve from Q1 FY25, thus delaying the execution for medium-term surface-to-air missile (MRSAM)," Elara wrote in its note.
Elara Capital said that the recent acceptance of necessity from the Defence Acquisition Council opens up medium-term opportunities for heavyweight torpedoes and Canister launched anti-armor Loiter Munition System.
The brokerage has trimmed its financial year 2024, 2025 and 2026 Earnings Per Share (EPS) estimates by 5%, 2% and 7% due to lower topline led by execution challenges in the MRSAM segment and the revised management guidance. It has downgraded the stock to "Sell" from "Reduce" earlier.
Additionally, it has also cut its price target from ₹1,600 earlier to ₹1,500.
Key risks for the company include lower spending in the defence capital budget, less allocation to procurement, increased competition from the private sector and a sharp jump in commodity prices.
Shares of Bharat Dynamics are trading 0.2% higher at ₹1,703.3. The stock has risen 85% over the last 12 months but has remained flat so far this year.
