Shares of Bharat Dynamics Ltd (BDL) came under sharp selling pressure on Friday, opening nearly 6% lower after the company’s weak March quarter performance triggered multiple brokerage downgrades and earnings estimate cuts.
The stock opened at ₹1,207 on the NSE, down 5.9% from its previous close of ₹1,282.20. Selling pressure remained elevated in early trade, with total sell quantity significantly outweighing buy orders.
The weakness follows a cautious stance from both Goldman Sachs and Motilal Oswal Financial Services after the defence manufacturer reported a disappointing fourth quarter and provided a subdued execution outlook.
Goldman Sachs maintained its Sell rating on Bharat Dynamics and reduced its target price to ₹1,260 from ₹1,375. The brokerage noted that the company has missed execution expectations for the seventh consecutive year and highlighted that FY26 revenue declined 27% year-on-year due to supply-chain issues and shortages of imported components.
The brokerage also pointed to inventory swelling 75% year-on-year to ₹46.3 billion as finished products await delivery. While Goldman Sachs expects FY27 order inflows to remain strong and estimates the FY26 order book at ₹257 billion, it warned that margin pressure could persist due to alternate sourcing of critical components and rising competition from private-sector defence players beyond FY28.
Motilal Oswal also turned cautious on the stock, downgrading Bharat Dynamics to Neutral from Buy after the weak quarterly performance and a softer-than-expected outlook.
According to the brokerage, although Bharat Dynamics has a healthy order book of around ₹26,000 crore, execution is likely to remain slower than previously anticipated. It also expects margins to remain under pressure due to a higher share of bought-out components in the revenue mix.
Motilal Oswal cut its earnings estimates by 25-28% and slashed its target price to ₹1,150 from ₹1,500. The brokerage said investors may consider switching preference within the defence space toward Bharat Electronics (BEL), citing BEL’s stronger fourth-quarter performance, healthier near-term order pipeline and visibility of sustained growth from upcoming defence programmes.
The brokerage highlighted expected order inflows for BEL from the QRSAM programme in June-July and potential opportunities from large platform orders across all three defence services. It also noted that BEL could benefit from positive sentiment after being selected among the manufacturers for India’s Advanced Medium Combat Aircraft (AMCA) programme.
The back-to-back brokerage downgrades have intensified concerns around Bharat Dynamics’ execution capabilities, despite the company’s strong order backlog and favourable long-term defence sector outlook.
Disclaimer: The views and recommendations are those of the respective brokerages and do not represent the views of the publication. This article is for informational purposes only and should not be construed as investment advice.