Shares of Bharat Dynamics Limited (BDL) have been under the pump after the company posted its earnings for the quarter ended September. However, analysts at Antique Broking see the stock turning things around.

The BDL Analyst: Antique Broking maintained its “buy” rating for the stock, but reduced the target price to ₹1,357 from ₹1,579. The revised target still indicates an around 42% upside from the stock’s current market price of around ₹955.

The BDL Thesis: BDL reported Q2FY25 revenue of ₹550 crore, a decline of 11.5% year-on-year (YoY) and below Antique Broking’s estimate of ₹700 crore. Analysts attributed the revenue miss to continued supply chain challenges that have persisted for the past eight quarters, hampering the execution of the company's robust ₹19,000 crore order backlog.

EBITDA stood at ₹98.8 crore, below the brokerage’s estimate of ₹140 crore, due to under-absorption of costs. EBITDA margin contracted 370 basis points YoY to 18.1%. PAT came in at ₹120 crore, a 16.7% YoY decline, and below Antique’s estimate of ₹157 crore.

Despite these issues, BDL has maintained its revenue guidance of ₹3,000 crore+ for FY25. The company plans to prioritize orders with a functional supply chain and defer those facing challenges to FY26, the brokerage said.

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With an order backlog of ₹19,000 crore —equivalent to 8.6x its trailing 12-month revenue—Antique highlighted robust revenue visibility.

The brokerage said that the defence manufacturer should see a strong influx of orders. The company expects to finalise orders worth ₹2,000–5,000 crore in FY25, with a strong pipeline exceeding ₹20,000 crore over the next two to three years. Key projects in the pipeline include large-scale orders for Astra MK II, QRSAM, and MRSAM. BDL had secured ₹1,760 crore in orders during FY24.

Antique noted that while supply chain issues have dampened execution, BDL is taking steps to address these challenges. The company is developing alternate strategies to accelerate deliveries for orders unaffected by supply chain disruptions, with execution expected to pick up in the second half of FY25. The brokerage believes that supply chain normalization and indigenization efforts will enhance BDL's ability to execute its large order backlog.

Antique remains optimistic about BDL's long-term prospects, citing strong business fundamentals and export opportunities.

Price Action: BDL’s share price was down 3.48% to trade at ₹955.15 on Monday afternoon.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.