Shares of Bharat Dynamics Ltd. snapped their four-day gaining streak to tumble nearly 15% on Monday after its first-quarter profit fell over 83%, missing analysts' estimates.
The company's standalone net profit fell 83.33% year-on-year to Rs 7 crore in the quarter ended June 2027, according to an exchange filing. That compares with the consensus estimate of Rs 104 crore given by analysts polled by Bloomberg.
Bharat Dynamics Q1 FY25 (Standalone, YoY)
Revenue falls 36% to Rs 191 crore. (Bloomberg estimate: Rs 634 crore).
Ebitda loss at Rs 52 crore versus Ebitda loss of Rs 32 crore (Bloomberg estimate: Rs 80 crore).
Net profit falls 83% to Rs 7 crore versus Rs 42 crore (Bloomberg estimate: Rs 104 crore).
The ongoing Russia-Ukraine war and conflicts in the Middle East region continued to affect supply chain issues, leading to delays in the receipt of inputs, which has impacted the performance for the quarter ending June 30, 2024, the company said in an exchange filing. The company anticipates resolving most of these issues by the later part of the second quarter of the current financial year.
The company holds Rs 83.4 crore in non-moving inventory from cancelled orders, with advances of Rs 360 crore exceeding the inventory's value, Nirmal Bang said in a note. "No redundancy provisions have been made by BDL with regard to the non-moving inventory, but potential write-downs in the coming quarters could reduce inventory value, affecting its financials," it said.
Though the brokerage had downgraded the defence sector to “sell” earlier this month because of extremely steep valuations relative to sector fundamentals, it continues to maintain an 'accumulate' rating on Bharat Dynamics with a target price of Rs 1,511, implying 5.4% upside from the previous close.
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The stock tumbled 14.8% to Rs 1,222.35 apiece, the highest level since May 18. It pared losses to trade 8.7% lower at Rs 1,310 apiece as of 9:53 a.m. This compares to a 0.52% decline in the NSE Nifty 50 Index.
The stock had risen nearly 7% over its closing price on August 5. It has risen 13.73% on a year-to-date basis and 26.49% in the last 12 months. Total traded volume so far in the day stood at 1.24 times its 30-day average. The relative strength index was at 35.16.
Out of nine analysts tracking the company, seven maintain a 'buy' rating, one recommends a 'hold,' and one suggests a 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 23.5%.
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