Goldman Sachs maintains a ‘Sell’ rating on Bharat Dynamics amid their cautious outlook on the company’s execution and margin pressures, despite a robust first quarter driven by missile programme revenues.
Goldman Sachs has kept a “Sell” rating on Bharat Dynamics Ltd, arguing that the recent rally in the state-owned defence maker’s shares already reflects much of the expected improvement in earnings and revenue. The brokerage left its target price unchanged at Rs 1,150, according to NDTV Profit.
The call comes after Bharat Dynamics delivered a strong first quarter, helped by faster execution and easing supply-chain constraints. Revenue jumped 131% year on year to Rs 5.7 billion, with the Akash missile programme doing much of the heavy lifting. Goldman Sachs said the quarter beat its estimates on revenue by 15% and on earnings before interest, tax, depreciation and amortisation by 52%.
Even so, the brokerage remains cautious about how quickly the company can turn its large order book into sales. Moneycontrol reported that Goldman Sachs sees Bharat Dynamics with an order book of about Rs 266 billion, or roughly 9.6 times book-to-bill, but still expects execution timing, project mix and margin pressure to limit upside. The report also noted that exports are unlikely to provide much support because they have historically made only a small contribution to revenue.
Other brokerages have taken a similar view. Motilal Oswal recently cut its target price to Rs 1,150 and kept a Neutral stance, citing delays in the supply of radars, seekers and other parts for Akash and Astra Mk1 missiles. It said higher use of bought-out components could weigh on margins, while some revenue is only expected to flow more meaningfully from fiscal 2028 onwards. Goldman Sachs, meanwhile, has warned that newer platforms such as Astra beyond-visual-range missiles could also pressure profitability as execution broadens out.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
