BDL - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.2
| Stock Code | BDL | Market Cap | 50,756 Cr. | Current Price | 1,384 ₹ | High / Low | 2,097 ₹ |
| Stock P/E | 87.5 | Book Value | 115 ₹ | Dividend Yield | 0.34 % | ROCE | 19.7 % |
| ROE | 14.4 % | Face Value | 5.00 ₹ | DMA 50 | 1,486 ₹ | DMA 200 | 1,496 ₹ |
| Chg in FII Hold | -0.14 % | Chg in DII Hold | -0.36 % | PAT Qtr | 72.9 Cr. | PAT Prev Qtr | 216 Cr. |
| RSI | 40.1 | MACD | -0.55 | Volume | 72,79,427 | Avg Vol 1Wk | 32,99,725 |
| Low price | 907 ₹ | High price | 2,097 ₹ | PEG Ratio | 53.0 | Debt to equity | 0.00 |
| 52w Index | 40.1 % | Qtr Profit Var | -50.4 % | EPS | 15.8 ₹ | Industry PE | 56.2 |
💹 Financials: Bharat Dynamics Ltd (BDL) maintains a debt-free balance sheet (Debt-to-equity: 0.00), which is a strong positive. ROE at 14.4% and ROCE at 19.7% show moderate efficiency in capital usage. However, quarterly PAT dropped sharply from 216 Cr. to 72.9 Cr., reflecting a -50.4% decline, which raises concerns about earnings consistency.
📊 Valuation: The stock trades at a P/E of 87.5, well above the industry average of 56.2, indicating overvaluation. The P/B ratio is ~12.0 (1384/115), which is steep. PEG ratio of 53.0 suggests extremely high valuation relative to growth prospects. Dividend yield at 0.34% is low, offering limited income return.
🏢 Business Model & Advantage: BDL is a defense sector company specializing in missile systems and allied defense equipment. Its competitive advantage lies in government contracts, strategic importance, and monopoly-like positioning in certain defense segments. Demand is supported by defense modernization and national security priorities.
📈 Overall Health: Financially stable with zero debt and strong order book visibility, but profitability has shown volatility. RSI at 40.1 indicates the stock is neither oversold nor overbought, suggesting neutral momentum. Long-term fundamentals remain intact due to defense sector tailwinds, but valuations are stretched.
🎯 Entry Zone: Attractive entry closer to 1,200–1,300 ₹ range, near support levels. Current price of 1,384 ₹ is still expensive relative to earnings. Long-term investors may hold due to sectoral strength, but fresh entry should be cautious.
Positive
- Debt-free balance sheet ensures financial stability.
- Strong ROCE at 19.7% indicates efficient capital use.
- Strategic positioning in defense sector with government backing.
Limitation
- Extremely high P/E and PEG ratios suggest overvaluation.
- Low dividend yield offers limited income return.
- Profitability volatility with sharp quarterly decline.
Company Negative News
- Quarterly PAT fell drastically (-50.4%) from 216 Cr. to 72.9 Cr.
- FII holdings decreased by -0.14% and DII holdings by -0.36%, showing reduced institutional confidence.
Company Positive News
- Strong order book visibility due to defense contracts.
- Debt-free status enhances financial resilience.
Industry
- Defense industry in India is growing due to modernization and government focus on self-reliance.
- Industry P/E at 56.2 indicates BDL trades at a premium valuation compared to peers.
Conclusion
BDL remains a strategically important defense company with strong fundamentals like zero debt and government-backed demand. However, valuations are stretched, and earnings volatility is a concern. Entry is advisable near 1,200–1,300 ₹ levels for long-term investors, while cautious accumulation is recommended given high P/E multiples.
Would you like me to also prepare a side-by-side HTML comparison of BDL with another defense peer like HAL to highlight relative strengths and risks?