Shares of Bharat Dynamics have doubled investors' wealth in the last one year, surging from ₹375.10 to ₹863.75 levels, delivering a return of 130%. The majority of the stock's gains have occurred since the beginning of the year.
So far in 2022, it has risen from ₹391.55 on January 03, 2022, to its current level of ₹863.75, representing a multi-bagger return of 122.04 per cent at a time when the Sensex has generated a return of 8.21%.
Further, over the last three years, the stock has surged from around ₹274 to ₹863.75 levels, logging a nearly 215.23 per cent rise in this period.
Bharat Dynamics is a small-cap defence stock with a market capitalization of Rs. 15,830.92 crores. The company is one of the leading defence PSUs in India engaged in manufacturing Surface to Air missiles (SAMs), Anti-Tank Guided Missiles (ATGMs), underwater weapons, launchers, countermeasures and test equipment.
Why the surge?
Bharat Dynamics bagged a contract worth ₹2,971 crore from the Ministry of Defence. The contract is for the supply of ASTRA MK-I Beyond Visual Range (BVR) air-to-air missiles and associated equipment to the Indian Air Force and Indian Navy, ET reported.
Further, investors also turned bullish on the stock after the Defence Ministry approved the procurement of military equipment and weapons worth ₹28,732 crore, which included swarm drones, carbines, and bulletproof jackets, an official press statement said.
On February 22, the company signed a contract worth ₹3,131.82 crore with the Indian army to manufacture and supply Konkurs-M Anti-Tank Guided Missiles.
Besides, the government's push for making in India and focus on strengthening the defence sector is also a major boost for domestic players like Bharat Dynamics.
Adding to that, the company's financials have improved in the last three quarters, and the net profit of the company has consistently increased.
In the quarter that ended March 2022, Bharat Dynamics clocked a net profit of ₹264.4 crore. The company posted a loss of ₹78 crore in the first quarter of 2020, but it returned to profit with ₹43.3 crore in the second quarter of 2021.
In the March quarter, the operating profit increased by nearly 17.44% to ₹404.1 crore compared to ₹344.3 crore in the same period last year. On a full-year basis, the company recorded a 93.91% surge in net profit to ₹499.9 crore.
Since its Q1 result announcement on May 26, the stock has gone from ₹741 to its current level of ₹863.75, delivering a return of over 16.56%.
Furthermore, the company anticipates ₹20,000 crore in orders in FY23 and has guided for 15% revenue and a 22% EBITDA margin in FY23.
FIIs have been bullish on the company for a long time. This is clear given their increased exposure to the stock over the last four quarters. FIIs held a stake of 0.4% in Bharat Dynamics back in the June 2021 quarter and exposure now stands at 2.4%. The government holds 74.9 per cent of the shares in the company. While mutual funds decreased their holdings from 9.00% to 8.27% in the June 2022 quarter, The regular shareholders own 8.08 per cent.
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