Motilal Oswal has upgraded Bharat Dynamics Limited (BDL) to buy from its earlier rating, citing improved execution prospects and more reasonable valuations following a sharp correction in the stock. The brokerage has set a target price of ₹1,900, implying a 28% upside from the current market price of ₹1,486. The stock has declined around 25% since July 2025, bringing its valuation down to 39 times and 29 times estimated earnings for FY27 and FY28 respectively, compared with 52 times and 38 times at the time of initiation.
In the first quarter of FY26, BDL’s execution rose 30% year-on-year, supported by a strong order book and easing supply chain constraints. While EBITDA margins were negative due to seasonal weakness, losses narrowed compared with the same period last year. Profit after tax exceeded consensus estimates, and Motilal Oswal expects execution momentum to accelerate in the coming quarters, driven by key projects including Akash, Astra Mk1, MRSAM and various armament programmes.
The company’s order book stood at approximately ₹233 billion, with a robust prospect pipeline of around ₹500 billion, further bolstered by emergency procurement initiatives. Motilal Oswal believes the healthy order visibility and the potential for faster execution provide a strong foundation for earnings growth. The brokerage has maintained its estimates and values the stock at 42 times September 2027 estimated earnings per share, noting that the correction in price has made valuations more attractive relative to growth prospects.
Disclaimer: The views and recommendations made in this article are those of Motilal Oswal. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
