Bharat Dynamics Ltd

Started in 1970, Bharat Dynamics Ltd is one of the leading defence PSUs in India engaged in the manufacture of Surface to Air missiles (SAMs), Anti-Tank Guided Missiles (ATGMs), underwater weapons, launchers, countermeasures and test equipment. BDL is the sole manufacturer in India for SAMs, torpedoes and ATGMs. Also it is the sole supplier of SAMs and ATGMs to the Indian armed forces. Additionally, company is also engaged in the business of refurbishment and life extension of missiles manufactured. BDL is also the co-development partner with the DRDO. BDL is a wholly-owned GoI company headquartered in Hyderabad and under the administrative control of the MoD,GoI and was conferred the 'Mini-ratna (Category -1)' status. BDL currently has three manufacturing facilities located in Hyderabad, Bhanur and Vishakhapatnam. Its Hyderabad manufacturing unit is engaged in the manufacture of SAMs, Milan 2T ATGMs, countermeasures, launchers and test equipment. Its Bhanur unit is engaged in the manufacture of the Konkurs – M ATGMs, the INVAR (3 UBK 20) ATGMs, launchers and spares. Its Vishakapatnam unit is engaged in the manufacture of light weight torpedoes, the C-303 anti torpedo system, countermeasures and spares. Company is also in the process of setting up two additional manufacturing facilities at Ibrahimpatnam (near Hyderabad) and Amravati in Maharashtra which shall be used to manufacture SAMs and Very Short Range Air Defence Missiles (VSHORADMs) respectively. Company's current order book as of January 31, 2018 is ?105,430.00 million. Its customers include the MoD, other defence PSUs, government bodies under the MoD and other countries. BDL enters into an agreement with its customers for the supply of its products. Its revenues under these contracts are linked to certain milestones. As of January 31, 2018, Company employed a total workforce of 3,136 full-time employees, which comprised of 889 engineers. On financial performance front, BDL has posted turnover/net profits of Rs. 1635.65 cr. / Rs. 278.79 cr. (FY13), Rs. 2305.70 cr. / Rs. 360.12 cr. (FY14), Rs. 3253.23 cr. / Rs. 443.16 cr. (FY15), Rs. 4601.38 cr. / Rs. 562.73 cr. (FY16) and Rs. 5198.07 cr. / Rs. 483.21 cr. (FY17). For H1 of FY18, it has reported net profit of Rs. 154.84 cr. on a turnover of Rs. 2190.25 cr. Thus company has posted healthy growth over last couple of years on consistent basis, except for FY17 where it suffered set back in bottom-line. BDL has posted an average EPS of Rs. 38.80 and average RoNW of 25.67% for last three fiscals. Issue is priced at a P/BV of 4.81 as per NAV on 30.09.17. It has no listed peers to compare with as per RHP. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 25. So issue looks fully priced. As per financials, company's growth is good, RoNW is 25.67% for last three fiscals and issue is priced at P/E of around 25. Company is in defence sector and manufactures missiles. GoI is very kin to develop defence industry in India and BDL will be one of the beneficiary of these efforts. So, we give SUBSCRIBE rating to this IPO.

• 1 President of India acting through the Ministry of Defence