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Informist, Wednesday, Nov. 13, 2024

By Ketan Barot

MUMBAI – Delays in material procurement due to supply chain disruptions will likely weigh on the defence manufacturing company Bharat Dynamics Ltd.'s Jul-Sept earnings. The geopolitical situation has affected the supply chain for product manufacturers of some sectors, including defence manufacturing companies, analysts said.

There are only three brokerage estimates for the company's September quarter earnings. The estimates for net profit vary widely, they range from INR 136 million to INR 1.58 billion. The highest estimate is from Antique Stock Broking Ltd. and the lowest estimate is from Nirmal Bang Equities Ltd. The company had reported a net profit of INR 1.47 billion in the same period a year ago. The third estimate, of INR 1.33 billion, is from Elara Securities (India) Pvt. Ltd.

The company is expected to post revenues of INR 2.83 billion–INR 7.02 billion. The company reported revenues of INR 6.16 billion in the same period a year ago. Antique Stock Broking has the highest estimate for the company's revenue at INR 7.02 billion, while Nirmal Bang has the lowest estimate of INR 2.83 billion. The third estimate of INR 5.85 billion is from Elara Securities.

While the other two brokerages expect the company to post an operating profit in the September quarter, Nirmal Bang expects the public sector unit to report an operating loss of INR 349 million. Antique Stock Broking expects Bharat Dynamics’ earnings before interest, taxes, depreciation, and amortisation for the September quarter to be INR 1.47 billion and Elara Securities expects EBITDA to be INR 1.19 billion.

The company's management had given a revenue growth guidance of 30% for 2024-25 (Apr-Mar) with peak sales in Oct-Mar, which will likely be driven by investments in research and development and joint ventures with foreign original equipment manufacturers, Nirmal Bang said. Bharat Dynamics is particularly focussed on the Akash Weapon System as it pursues international orders, the brokerage said.

As the government focusses on defence indigenisation under its 'Make in India' initiative, the defence sector will likely benefit from a boost in demand, Antique Stock Broking said. The government initiative has led to multiple large ticket orders being finalised during the year, the brokerage said.

The Ministry of Defence is harnessing the domestic defence ecosystem by imposing an embargo on the import of 101 defence items to boost indigenisation, increasing the foreign direct investment limit to 74% from 49%, and encouraging foreign original equipment manufacturers to set up manufacturing and maintenance entities through subsidiaries in India, Antique Stock Broking said.

With a strong business outlook and an all-time high order book being reported by most defence companies, Antique expects execution to further improve and translate into profits. However, the brokerage said the geopolitical situation has affected the supply chain, and it will likely normalise in FY25, which will lead to improved revenue bookings.

Bharat Dynamics manufactures and supplies guided missiles, underwater weapons, air-borne products and allied defence equipment for the Indian armed forces. It has four manufacturing units, out of which three are located in Telangana and one in Andhra Pradesh. 

On Wednesday, shares of the company closed at INR 979.20 on the National Stock Exchange, down 4.8%. In nine sessions so far this month, shares of the company have ended down seven times. The company will announce its earnings for the September quarter on Thursday.  End

Edited by Akul Nishant Akhoury

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