BDL Lands Massive Rs 750 Cr Army Missile Order

Company Name: Bharat Dynamic Ltd | NSE Code: BDL | BSE Code: 541143 | 52 Week high/low: 1,410/787 | CMP: INR 1,381 | Mcap: INR 25,313 Cr | PE: 59.4

Company Overview:

Bharat Dynamics Ltd is a government entity under the Ministry of Defence, Government of India. The company is actively involved in manufacturing and supplying guided missiles, underwater weapons, airborne products, and other allied defense equipment for the Indian Army. Currently, it operates three manufacturing facilities in Hyderabad, Telangana, Bhanur, and Vishakhapatnam, Andhra Pradesh. Recently, BDL secured a significant supply order of Anti-Tank Guided Missiles (ATGM) worth Rs 750 Cr from the Indian Army.

Robust New Order Book in Q2:

In Q2FY24, Bharat Dynamics Ltd experienced a surge in new orders, totaling Rs 1,659 Cr from April 23 to September 30, 2023. This strengthened the company’s total order book to an impressive Rs 20,766 Cr as of September 30, 2023. Notable orders include the ATGM order (Rs 750 Cr), upgraded version of Akash Missiles (Rs 247 Cr), LBRM (Rs 254 Cr), and ULPGM (Rs 105 Cr).

Robust Sequential Revenue Growth

During Q2FY24, the standalone revenue from operations witnessed remarkable growth, increasing by 106.84% QoQ and 15.15% YoY, reaching Rs 616 Cr. This substantial revenue growth was attributed to the higher order book of Rs 1,659 Cr in Q2FY24. While the Cost of Goods Sold (COGS) rose by 118.41% QoQ and 13.88% YoY to Rs 271 Cr, the gross profit for the quarter surged by 98.55% QoQ and 16.17% YoY, amounting to Rs 344 Cr. The gross margin experienced a YoY increase of 50 basis points but declined by 230 basis points QoQ.

Improved Performance QoQ:

BDL’s Q2FY24 performance was impressive, partially attributed to the realization of some lagged revenue from FY23. Key highlights include a 42.8% YoY increase in EBITDA to INR 1.3 billion, with an EBITDA margin improvement of 422 basis points to 21.8%. Other expenses rose by 41% YoY due to repairs and provisions. Billed receivables increased, offset by a decline in unbilled receivables. Other income rose by 74% YoY to INR 783 million. The order book at end-September 2023 stood at INR 200 billion, indicating a robust book-to-bill ratio of 9.3x.

Valuation and Key Ratios

As of now, the stock trades at a multiple of 59.4x earnings per share (EPS) (TTM) of Rs 23.2, with a market price of Rs 1,381. The stock is valued at 7.47 times its book value of Rs 184 per share. In terms of EV/EBITDA, the company ranks 3rd with a multiple of 33.9x, compared to the industry median of 22.4x. The trailing twelve-month return on equity (ROE) and return on capital employed (ROCE) stand at 11.3% and 15.6%, respectively. The interest coverage ratio is robust at 175x, indicating the company’s solvency.

Q2FY24 Result Update: Consolidated

➡️In Q2FY24, standalone revenue grew 15.15% YoY (+106.84% QoQ) to 616 Cr, driven by the strong new order book in the quarter.

➡️Gross profit increased 16.17% YoY (+98.55% QoQ) to 344 Cr, while gross margin dropped 230 bps QoQ (+50 bps YoY) to 55.92%.

➡️EBITDA surged 42.82% YoY (-510.66% QoQ) to 134 Cr, driven by robust growth in topline and margin improvement. EBITDA margin improved 400 bps YoY to 21.77%.

➡️Operating profit (EBIT) increased by 60.75% YoY (-335.44% QoQ) to 116 Cr, with an EBIT margin jumping by 530 bps YoY to 18.94%.

➡️Profit after tax (PAT) saw a remarkable surge of 94.02% YoY (+251.76% QoQ) to 147 Cr, and the PAT margin expanded by 970 bps YoY and 980 bps QoQ to 23.89%.

➡️Earnings per share (EPS) for the quarter stood at 8.04 Rs, compared to 2.28 Rs in the previous quarter.

Conclusion

Bharat Dynamics Ltd demonstrated a robust performance in Q2FY24, marked by substantial revenue growth, a strengthened order book, and improved margins. The company’s strategic positioning in the defense sector, coupled with a solid financial foundation, reflects positively in its valuation metrics. With a significant order pipeline and efficient financial management, BDL remains well-positioned for sustained growth in the defense manufacturing sector.

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