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  • 08 Feb 2023
  • ICICIdirect Research

BHARAT DYNAMICS OPERATIONAL PERFORMANCE WORSE THAN EXPECTED ON MUTED EXECUTION

BDL - 1798 Change: -26.10 (-1.43 %)

News: Revenue declined by 42.6% YoY (-13.7% QoQ) to Rs 461.6 crore in Q3FY23; significantly lower than our estimate of Rs 862.6 crore. The sharp decline in revenues shows muted execution during the quarter. However, 9MFY23 revenue is up 17.8% YoY as the revenue was significantly up during Q1FY23 (+440.3% YoY) on lower base. Gross margins improved by 619 bps YoY (+1436 bps QoQ) to 69.8% as raw material cost declined considerably. EBITDA margin stood at 19.3% (vs estimate of 27%); contracted by 1674 bps YoY led by significantly higher others cost. 9MFY23 EBITDA margin is also down 911 bps YoY at 13.3%. EBITDA declined by 69.3% YoY (-5.3% QoQ) to Rs 88.9 crore (vs estimate of Rs 232.9 crore). PAT declined 61.1% YoY to Rs 83.7 crore. 9MFY23 PAT is down by 15.5% YoY to Rs 199.4 crore

Views: Q3FY23 operational performance was worse than expectations on account of weaker than expected execution. We had been expecting some impact on execution on account of delays in procurement of key components or raw materials from local sources but the execution remained slower than expectations. However, order backlog at Rs 11906 crore (3.8x TTM revenues) as of Nov-22 end gives strong revenue visibility. Long term outlook also is strong considering the Rs 20000 crore worth of orders in pipeline like Akash surface to Air missile, medium range surface to air missiles, Mistral man portable air defence system, Advanced Short Range Air-to-Air Missile etc and many products under missiles/torpedoes under development phase.

Impact: Negative