Brokerage firm Motilal Oswal has downgraded the stock to ‘Neutral’ from its earlier stance and cut the target price to ₹1,150 from ₹1,500, implying a potential downside of nearly 10% from current levels.
The brokerage said Bharat Dynamics’ Q4FY26 performance came in below estimates as execution was impacted by delays in the supply of radars, seekers and other critical components for Akash and Astra Mk1 missile systems from external vendors.
Profitability was dragged by a sharp rise in employee expenses and other expenses. Employee costs rose to 22% of sales from 16% a year ago, while other expenses increased to 19% from 16%.
Material costs, however, remained stable at nearly 50% of sales and were substantially lower on a yearly basis at 38% versus 59%.
According to Motilal Oswal, Bharat Dynamics is likely to book revenue of ₹2,000-2,500 crore in H1FY27 from these orders as component supplies begin. The company may also import certain components to avoid further delivery delays.
While the company’s order book remained healthy at ₹26,000 crore, the brokerage expects execution to remain slower than earlier estimates, with margins likely to stay under pressure due to a higher share of bought-out components.
Motilal Oswal has consequently cut its FY27 and FY28 earnings estimates by 25% and 28%, respectively.
The brokerage said that the stock is currently trading at 70.5x, 48.1x and 38.1x FY27, FY28 and FY29 earnings, respectively, and believes investors should wait for a sustained improvement in execution and better supply-side visibility.
‘Execution remains a key concern’
Goldman Sachs has maintained a ‘Sell’ rating on Bharat Dynamics and cut its price target to ₹1,260.
The brokerage said execution remains a key concern, citing that the company has missed expected execution targets for the seventh consecutive year.
According to channel checks conducted by Goldman Sachs, the FY26 miss was primarily due to domestic supply-chain issues and the unavailability of a critical component from an overseas supplier.
As a result, unlike other defence peers under its coverage, Bharat Dynamics reported a 27% YoY decline in FY26 revenue.
The brokerage also highlighted that inventory surged 75% YoY to ₹4,630 crore, which is more than twice the company’s FY26 revenue, mainly due to finished goods awaiting delivery.
On the positive side, Goldman Sachs estimates Bharat Dynamics’ FY26 order book at ₹25,700 crore, implying a book-to-bill ratio of over 10x, the highest among companies under its coverage.
The brokerage expects order inflows to remain strong at around ₹14,000 crore in FY27. However, it said a meaningful improvement in execution will remain a key monitorable going forward.
Shares of Bharat Dynamics ended 3.5% lower at ₹1,283.40 on Wednesday. The stock has declined more than 13% so far in 2026.
