Bharat Dynamics upgraded to ‘Buy’ on Improved Valuations and Export Momentum

Motilal Oswal has upgraded Bharat Dynamics Limited (BDL) to ‘Buy’ from ‘Neutral’, citing attractive valuations after a 25% correction since coverage began in July. The stock now trades at 28.6x FY28 P/E, with a target price of ₹1,900—implying 28% upside from current levels. The brokerage expects margin expansion and improved execution in coming quarters, driven by BDL’s strategic initiatives: Establishment of an in-house RF seeker facility at Kanchanbagh, reducing import dependence. Capacity expansion for SAMs, VSHORAD rockets, ATGM propellants, and next-gen missiles. Indigenization push, with 80–90% local content in key platforms, lowering input costs and boosting scale efficiencies. BDL is also emerging as a leader in defence exports, with export revenue surging to ₹1,200 crore in FY25 from ₹160 crore in FY24. This aligns with India’s record defence exports of ₹23,600 crore in FY25, expected to double in 2–3 years. With global defence spending set to rise—NATO targeting 5% of GDP by 2035—Motilal Oswal believes BDL is well-positioned to capture export opportunities, making it a preferred play in India’s growing defence manufacturing story.