Bharat Dynamics trims FY24 revenue guidance on supply concerns from Israel; Elara Capital downgrades stock, cuts target
Bharat Dynamics has pared its revenue guidance to ₹2,900 crore - ₹3,000 crore from ₹3,200 crore in FY24 versus, implying a 21% growth versus FY22, according to a report by Elara Capital. The brokerage estimates of ₹3,180 crore revenue. The company expects revenue to grow to ₹4,000 crore in FY25E and to ₹5,000 crore in FY26, led by execution of Astra Mk1 Beyond Visual Range Air-to-Air Missile (BVRAAM), ATGM, Akash, and exports.
It also cut its EBITDA margin guidance to 20-21% from 20-23% earlier. The brokerage firm estimates EBITDA at 21.7%. Also Read: Stay light ahead of the elections; defence, engineering, railways, infra look overvalued, says Jimeet Modi of SAMCO “The management of Bharat Dynamics indicated that supply chain concerns led by the Russia-Ukraine war have largely mitigated as of now and complete normalization may be expected by Q1FY25.
However, supplies from Israel may only begin to improve from Q1FY25, thus delaying the execution for medium-range surface-to-air missile (MRSAM)," Elara Capital said. The company had an orderbook worth ₹20,100 crore as of January 2024. It expects inflows of ₹3,000 crore in Q4FY24, of which 60% may comprise SAM, 30% ATGM, and the balance 10% others.
The brokerage believes the recent Acceptance of Necessity (AoN) approval from the Defence Acquisition Council (DAC) opens up medium-term opportunities for heavyweight torpedoes and Canister Launched AntiArmour Loiter Munition System. Elara Capital trimmed its FY24, FY25 and FY26 Earnings Per Share (EPS) estimates by 5%, 2% and 7% due to lower topline amid execution challenges in MRSAM and management’s revised guidance. Also Read: IOC, HPCL, BPCL shares baking-in high margins, steep premiums, says CLSA; retains Sell on worries over
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