Bharat Dynamics Shares Tank 6% Amid Profit Booking After Weak Q4 Results

Shares of Bharat Dynamics tanked close to 6% on May 28 as investors rushed to cash in recent gains in the stock after the company reported a weak set of Q4 earnings. With the stock having clocked in over 35% gains in the last one month, investors had plenty headroom to take home partial profits.

As for the quarterly earnings, Bharat Dynamics reported a 5.5% on year fall in its Q4 net profit to Rs 272.7 crore, down from the Rs 288.8 crore that it clocked in the same period last year.

In contrast, revenue soared to Rs 1,777 crore, up from Rs 854 crore a year earlier, driven by a strong execution cycle in its order book for defence equipment.

To that effect, it was the sharp weakness in the company’s operational performance that weighed heavily on its bottomline. The company’s EBITDA margin eroded sharply to 16.83%, from 37.04% a year ago, bogged down by a spike in input costs and lower operating leverage.

While the state-owned defence major has enjoyed an influx of strong order wins in recent quarter, the volatility in the company’s operational performance has continued to irk investors.

To that effect, analysts at Nuvama Institutional equities remain hopeful, stating that although the Bharat Dynamics previously encountered supply chain disruptions due to its dependence on war-affected nations such as Russia and Israel, it believes these challenges have now eased out.

In this regard, Nuvama believes that going forward, it will be the sustained execution momentum along with levelling up of current operating margin levels that will be the key triggers for the company.

That said, Nuvama also holds the view that Bharat Dynamics remains well positioned to delivered a revenue CAGR of over 60% during FY25–27, driven by its robust backlog of around Rs 228-bn at FY25-end.