Bharat Dynamics share price tanks 19% after Q1 net profit slumps 80%; Antique Broking cuts target for the defence stock

Bharat Dynamics share price plunged 19% in opening trade on Monday after the state-run defence company’s net profit in the June quarter slumped more than 80% as compared with the same period last year. Bharat Dynamics shares opened 19% lower at ₹1,160.05 apiece on the BSE.

Bharat Dynamics reported a net profit of ₹7.21 crore in the first quarter of FY25, a steep fall of 82.8% from ₹41.81 crore in the year-ago quarter.

The PSU defence company’s revenue from operations in Q1FY25 declined 35.8% to ₹191.16 crore from ₹297.72 crore, year-on-year (YoY).

At the operating level, the company reported an EBITDA loss of ₹52.3 crore in the quarter ended June 2024, higher than the loss of ₹32.6 crore in the same quarter last year.

Bharat Dynamics Q1 results were below street estimates. Supply chain issues pertaining to certain electronic components have hampered the company’s performance over the past seven quarters.

However, Antique Stock Broking believes these issues seem to be receding and expects normalization of supply from overseas vendors from H2FY25 onwards. Additionally, BDL is also planning to indigenize the critical component ecosystem so as to avoid over reliance on foreign vendors.

“We believe BDL has the capability to execute its existing large order backlog of ₹190 billion as supply chain issues are sorted. Also, BDL being DRDO's production partner, it will maintain a steady inflow of orders leading to further build-up of a robust order backlog. Exports, which are 13% of the order book currently, have the potential to grow meaningfully as the Cabinet Committee on Security has approved the export of Akash missiles to nine countries,” said Antique Stock Broking.

The brokerage firm continues to maintain an optimistic stance on the Bharat Dynamics stock and retained a ‘Buy’ rating.

“Given the strong business outlook and a huge export opportunity available to BDL, we continue to remain positive on the company’s long-term business prospects and maintain our positive stance on the company,” said the brokerage house.

Bharat Dynamics Share Price Target

However, it cut Bharat Dynamics share price target to ₹1,579 apiece from ₹1,643 earlier as it scales down earnings estimates by 20%, 8% and 1% for FY25, FY26 and FY27, respectively, to factor in the near-term supply chain challenges.

Bharat Dynamics share price has fallen 22% in the last one month, while the stock has rallied more than 53% year-to-date (YTD). Bharat Dynamics shares have given multibagger returns of over 132% in the past 12 months.

At 10:00 am, Bharat Dynamics stock price was trading 8.90% lower at ₹1,305.95 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.