First Time Ever 1:2 Stock Split, Miniratna PSU BDL To Also Pay Rs 8.85/Share Dividend: BUY For Rs 2,010 TP

Defence giant, Bharat Dynamics which holds Miniratna status, has declared double rewards for its investors. The PSU is not only going to pay a hefty dividend to the tune of Rs 8.85 per share but will also split into two soon. BDL is an attractive bet in the sector due to its healthy order book and expansions of business.

Bharat Dynamics Share Price:

On BSE, Bharat Dynamics' share price ended at Rs 1,685.65 apiece, up by 1.5% with a market cap of Rs 30,894.80 crore. YTD, the stock is down by 2.4%.

However, in six months, BDL has gained by over 70%. While in a year, the stock surged by over 86%.

Bharat Dynamics Dividend:

The company has announced an interim dividend of Rs 8.85 per share having a face value of Rs 10 each fully paid-up for the financial year 2023-24. For the same, BDL fixed April 2 as the record date to determine eligible shareholders for the payment of Interim Dividends.

The payment of Interim Dividend will be completed on and before 18 April 2024.

This is the first interim dividend for FY24. In the financial year 2022-23, the company paid up to 93.50% dividend amounting to Rs 9.35 per share.

It has a dividend yield of 0.55%.

Bharat Dynamics Stock Split:

1:2 Stock Split: The defence PSU announced a stock split ratio of 1:2, meaning 1 existing share will split into two new shares. The face value will be cut from Rs 10 to Rs 5 per share.

The reason behind the stock split is to comply with DIPAM Guidelines on Capital Restructuring; (ii) To encourage wider participation of small investors; and (iii) To enhance liquidity of the Equity Shares of the Company in the Stock Market.

This is the first-ever stock split by Bharat Dynamics.

BDL expects to complete the stock split in about 2-3 months from the date of shareholders' approval. It said, "The record date for the above sub-division/ split of Equity Shares shall be decided after obtaining approval for sub-division/ split from the shareholders through postal ballot electronic voting process and will be intimated in due course."

Bharat Dynamics Target Price:

In its latest research note, ICICI Direct said, "We believe BDL is strongly placed to benefit from increasing capital outlay for indigenised defence platforms like missiles, torpedoes & Countermeasure dispensing systems. We estimate revenue, EBITDA and PAT to grow at 29.4%, 41.4% and 46.9% CAGR respectively over FY23-26E."

Further, it added, "Valuation at 27.3x P/E on FY26E basis looks attractive given strong growth ahead led by multiple sectoral tailwinds. We recommend BUY on BDL with a target price of ₹ 2010 per share (based on 33x FY26E EPS)."

This implies a potential of over 19.4% upside in Bharat Dynamics ahead compared to the current market price.

In its investment rationale, ICICI Direct's note highlighted the following:

1. Healthy order-book:

Bharat Dynamics order backlog is estimated at Rs 20,000 crore (9x TTM revenue) providing healthy growth visibility. The orders pipeline also remains strong (in both domestic and exports) which includes various SAM (Surface to Air missile) variants including Akash NG, Quick Reaction (QRSAM) & Vertical launched Short Range (VLSRSAM), ATGM (Anti-Tank Guided Missile) like Helina/Dhruvastra, Nag, MPATGM, Smart Anti-Airfield Weapon (SAAW), Astra MK2, torpedoes etc. The strong pipeline provides more comfort in future growth visibility.

2. Expanding Capabilities:

The defence giant has been investing in infrastructure, increasing capacity and expanding R&D activities, both in-house and in association with DRDO for various development and production programmes. BDL has also been focused on entering into various agreements with foreign OEMs, both for manufacturing in India as well as joint development programmes, catering to domestic customers and export markets.

Also, the products/projects under development include Amogha-III ATGM, Drone fired missiles and bombs, LBRM (Laser Beam Riding Missile), Mistral short-range missile system, ASRAAM (Advanced Short Range Air-to-Air Missile), SPIKE ER2 etc.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.