Buy This Multibagger Miniratna Defence PSU Stock For Target Price of Rs 1070: ICICI Direct

Stock Outlook

On 17 August, the stock closed at Rs 852.60 apiece, it was opened at Rs852.20. Currently, the stock is trading above Rs 485 from its 52-week low and Rs 52.3 below its 52-week high, respectively. The stock's 52 week low was recorded in August 2021 at Rs 367.60 apiece and the 52 week high was in April 2022 at Rs 904.90 apiece, respectively.

Stock Returns

The stocks of the company are listed on the exchange in March 2018. Since then, the stocks gave a multibagger return of 118.73%. In the past 1 week, the shares surged 0.6%. Over the 1 and 3 months, stocks gave a positive return of 23.14% and 19.69%, respectively. Over the past 1 and 3 years, the socks gave a multibagger return of 129.84% and 193.34%, respectively. 

Financial Year 2022 

During FY22, BDL reported revenue of Rs 2817 crore, which increased 47.2% YoY. EBITDA and PAT increased 110.6% and 93.9% YoY in FY22 to Rs 726 crore and Rs 500 crore, respectively. Order book as of June 2022 was at Rs 13000 crore (order inflows at Rs 4500 crore in FY22).

Key triggers for future price performance

Increasing capital outlay in defence with indigenisation has been the focus area of the government considering the armed forces requirement of faster procurement of modern equipment.

Order book at Rs 13000 crore (4.6x FY22 revenues) gives strong revenue visibility. Moreover, Rs 22000 crore worth of orders are in the pipeline for the next three to four years gives more comfort on future earnings.

Expanding capabilities to enhance market position and competitiveness. Continuous investment in R&D and expanding infrastructure to develop new generation products.

Huge opportunity in exports (Akash SAM, ATGMs, Astra, Torpedoes) driven by rising interest from friendly countries and lower cost on high indigenisation levels.

ICICI Direct suggests buy for target price of Rs 1070

The brokerage said, "We expect BDL to deliver revenue and EBITDA CAGR of 28.8% and 26.8%, respectively, in FY22-24E. PAT is likely to grow at 25.1% CAGR (FY22-24E). Increase in profitability with strong asset turnover is expected to result in healthy return ratios over FY23-24E. We initiate coverage on the stock with a BUY recommendation. We value BDL at Rs 1070 on 25x P/E on FY24E EPS basis."

Bharat Dynamics

Bharat Dynamics Limited (BDL) is one of the leading defence PSUs in India engaged in the manufacture of surface-to-air missiles (SAMs), anti-tank guided missiles (ATGMs), air-to-air missiles (AAMs), underwater weapons, launchers, countermeasures and test equipment.

Headquartered in Hyderabad, Bharat 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.

Since its inception, BDL has been working in collaboration with DRDO & foreign Original Equipment Manufacturers (OEMs) for the manufacture and supply of various missiles and allied equipment to the Indian Armed Forces.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.