On Thursday, March 30, 2023, Bharat Dynamics ltd. (BDL) announced the signing of a contract worth Rs 8,161 crore with the Ministry of Defence (MoD) to supply the Akash Weapon System to the Indian Armed Forces. The contract, signed in New Delhi, is for two regiments of the Indian Army and is expected to be executed within three years.

Following the news, the shares of BDL rose during early trades today, touching 5.5% higher to Rs 1,007.15 per share at 9:25 am.

Moreover, the Defence PSU has also bagged an order worth Rs 261 crore from MLH Helicopters for a CounterMeasures Dispensing System (CMDS), a defensive system designed for aircraft that protects against radar-guided and infrared-seeking missiles by deploying chaffs and flares.

BDL’s consolidated order book position has reached an astounding figure of approximately Rs 24,021 crore with the signing of these new contracts. The defence pack has seen a rally due to the increasing focus on indigenisation, and wealth managers are scrambling to add the right defence stocks to their portfolios.

While some analysts predict that BDL may face a hiccup on the order inflow and supply fronts, which could hamper FY23 earnings, others believe that FY24 numbers may still be positive.

The current financial year, 2022-23, has been eventful for BDL, with the company receiving new orders from domestic and international markets. It has also set up state-of-the-art manufacturing facilities, unveiled new products for the armed forces, and signed MoUs with foreign and Indian companies that have opened up new business opportunities for the firm.

BDL could expect orders worth Rs 10,000-12,000 crore in FY24 for the Akash surface-to-air-missile, medium-range surface-to-air-missile, Nag anti-tank guided missile, and Helina air-to-surface missile, according to Elara Securities.

The signing of the new contract is expected to boost the Akash programme significantly. Commodore Siddharth Mishra (Retd), Chairman and Managing Director of BDL, stated that both the company and its supply chain partners are geared up to meet the production demands of the Weapon System.

Furthermore, Bharat Dynamics has signed an MoU with several foreign OEMs based in France, Belgium and the UAE for various products and systems. According to CMD Siddharth Mishra, the company’s R&D expenses have increased to Rs 100 crore compared to Rs 30 crore. He also said that the company has export orders worth $320 million, strengthening its position as a global player in the defence industry.

Shares of Bharat Dynamics have turned positive for the year and were trading at Rs 984.90 at 11:43 am. Although revenue growth may come under pressure due to the electronics supply issue, the overall outlook for BDL looks positive due to the order inflow and the company’s efforts towards indigenisation and R&D.