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Bharat Dynamics Ltd., a state-run defence equipment manufacturer, has reduced its revenue projection from ₹3,200 crore to ₹2,900 crore for fiscal year 2024, according to Elara Capital. The revenue projection was reduced due to supply chain issues in Israel.
However, the business anticipates that its sales will reach ₹4,000 crore in the fiscal year 2025 and surpass ₹5,000 crore in the fiscal year 2026. The Astra Mk1 Beyond Visual Range Air-to-Air missile, ATGM, Akash, and exports would be the main drivers of this growth. Additionally, the business lowered its earlier 20%–23% EBITDA margin target to 20%–21%.
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.
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