Defence PSU stocks witnessed a major rally on Wednesday, December 4, 2024, after the Defence Acquisition Council (DAC) approved 05 capital acquisition proposals worth Rs 21,772 crore to augment defence preparedness. Giants like Bharat Electronics and Hindustan Aeronautics surged. Amidst this however, Axis Securities has recommended buying 1 defence stock for gains up to 15% which is neither BEL nor HAL but instead a midcap defence PSU company with zero-debt, Bharat Dynamics (BDL). BDL shares have zoomed by at least 6% on December 4th already, outrunning BEL and HAL.
BDL Share Price:
At the time of writing, BDL shares zoomed by 5.8% to trade at Rs 1,218.95 apiece on BSE, with a market cap of Rs 44,682.14 crore. The stock is trading near its intraday high of Rs 1225 apiece. BDL has a healthy return on equity of 14.83%, while the stock has rallied by 42% YTD.
Axis Securities On BDL:
As per the investment idea for the short term, Axis Securities has selected BDL among its top picks. The brokerage suggested the entry price in BDL to be in the range of Rs 1,180 to Rs 1,192, while the stop loss is at Rs 1,164 apiece. The target price is set at Rs 1,328 for 15 days period.
From the previous session's closing price, where BDL shares were at Rs 1152.50 apiece, there is potential for 15.22% gains in 15 days in BDL. Notably, BDL has already garnered 6% gains on Wednesday. From the latest intraday high, BDL shares are seen to have the potential of a 7% upside ahead.
As per Axis Securities, Bharat Dynamics Ltd has given the 3rd best dividend yield of 0.89 for 3 Years among stocks in the Capital Goods Electrical Equipment Sector. Further, FII shareholding in BDL has decreased by -4.82% in the past 1 Year. Also, In the last 1 year, BDL has beaten Nifty 200 by 72.74%.
Also, as per Trendlyne data, the consensus recommendation from 5 analysts for Bharat Dynamics Ltd. is BUY. EPS is expected to grow by 9.4% in FY25.
Notably, BDL is also near Elara Capital's latest target of Rs 1,230 apiece. On valuation, Elara's latest note said, "We upgrade to Buy from Sell, as BDL is a key beneficiary of a robust order pipeline for domestic as well as export markets, being the only DPSU missile manufacturer, and the stock underperforming the Nifty by 21% for the past three months vs the Index at 3%. We expect an earnings CAGR of 48% during FY24-27E with an average ROE of 23% during FY25-27E. Key risks to our call could be a slowdown in defence capex and order inflows."
Bharat Dynamics (BDL) Corporate Actions:
BDL has not carried any bonus issue, however, in 2024, the stock split in the ratio of 1:2. The face value of Rs 10 each of BDL has been split to Rs 5 each since May 24, 2024. This stock split was the first by BDL.
Meanwhile, BDL has delivered about 13 dividends since September 2018, as per Trendlyne data. In 12 months, the company delivered about Rs 9.70 per share dividend. Currently, it has a dividend yield of 0.45%.
Headquartered in Hyderabad, Bharat Dynamics Limited (BDL), was incorporated on 16 July 1970 as a Public Sector Undertaking under the Ministry of Defence, Government of India to be the manufacturing base for guided missile systems and allied equipment for the Indian Armed Forces.
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