Attractive Valuation And Order Book Could Make Bharat Dynamics Shine

ET Intelligence Group: Investors may subscribe to the initial public offer (IPO) of Bharat Dynamics (BDL), a manufacturer of missiles for the Indian defence forces, because of its attractive valuations and a healthy order book. BDL is the first missile manufacturer in the world to list its stock. Hence, some investors say it may attract a scarcity premium. As this is an offer for sale by the government of India, the entire proceeds from the IPO will add to the divestment kitty.

Business model

Headquartered in Hyderabad, BDL is the sole manufacturer of Surface to Air Missiles (SAM), Torpedoes and Anti-Tank Guided Missile (ATGM) in India and a public sector undertaking under the Ministry of Defence. The key offering of the company is Akash SAM and ATGM such as Milan 2T, Konkurs M and INVAR to Indian Army. The total guided missile and torpedo market of India is around $24.49 billion and expected to grow 4.75 per cent a year until 2026, according to Frost and Sullivan. About 80 per cent of the market valuation remains unaddressed and $19.41 billion worth of opportunities will emerge in 2017-26. BDL product offerings are capable of addressing 53.5 per cent of the total market. At the end of January 2018, the company had outstanding order book of Rs 10,543 crore, which is equivalent of twice of the last fiscal year revenues. BDL is the nominated production agency for the Very Short Range Air Defence System, an order worth Read More…

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