This post on Bharat Dynamics IPO tries to bring out consolidated brokerage views , Grey Market Premium, Subscription information. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Bharat Dynamics IPO or not.
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12/03/18 Grey Market Premium Rs. NIL
Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on Bharat Dynamics Limited IPO .
Angel Broking: “In terms of valuations, the pre-issue P/E works out to 22.7x 1HFY2018 annualized earnings (at the upper end of the issue price band), which is lower compared to BDL’s peers like Bharat Electron and Apollo Micro System (trading at 33.6x and 40.7x of its 1HFY2018 annualized earnings respectively). Further, BDL has a strong order book and revenue visibility, coupled with superior return ratios compared to peers. Hence, considering the above positive factors including growth in the defence industry, we recommend SUBSCRIBE on the issue”
Capital Market: ” Score 47/100, At higher price band of Rs 428, the P/E on FY 17 EPS (on current diluted equity of Rs 183.28 crore) of Rs 26.8 works out to 16. There are no listed players engaged in the manufacturing of missiles in India. Due to the nature of its business, there can be volatility in quarterly earnings and it has to maintain secrecy about its plans at the cost of investor friendliness, which may affect the P/E that it can command.”
Choice Broking:“ The Indian defence market at an inflexion point today with policy changes mandating indigenous production, private sector participation and relaxation in the FDI regime. Competition is expected to increase in future from the private players, but there would be certain limitations of the production capabilities of the private players. BDL with its strong track record in the production of guided missile and emerging demand from the export market is expected to gain in medium to long term. Thus considering the above observations, investors can “SUBSCRIBE” for the issue with mid-long term investment perspective.”
Motilal Oswal: ” Given BDL’s dominant position as a Government owned enterprise in the Defence sector, strong return ratios, negative working capital management, strong growth track and superior balance sheet (debt-free) makes us positive on the company. At the higher end of the price band, BDL is valued at 16xFY17EPS, a significant discount to Bharat Electronics (which trades at 25xFY17EPS). Hence, we recommend SUBSCRIBE“
Nirmal Bang: “BDL has demonstrated strong execution skills having grown its sales at 30% CAGR over FY15-17. Being the sole manufacturer of SAM (Surface to Air Missile) & ATGM (Anti-Tank Guided Missile), BDL possesses huge growth opportunities in the Indian defense industry with the government now adopting a multi-pronged approach towards indigenization including the new DPP 2016 which focuses on developing domestic manufacturing capabilities. A strong order book of Rs. 10,543 Cr ensures sales visibility (Order book-to-Sales of 2.2x). On the valuation front, at the given upper price band of Rs. 428, BDL is being offered at PE of 11.3x / 15.9x its FY17 / FY18E EPS and EV / EBITDA of 7.9x / 9.4x its FY17 / FY18E EBITDA. Based on the business capabilities, growth prospects and valuations, we believe BDL is attractively priced and recommend subscribing to the issue.”
Prabhudas Liladhar : “While we do not expect listing gains, investors with a long
term view can subscribe to play the long term potential of missile procurement in
India over next decade.”
SMC : “Rating 2.5/5 Considering the P/E valuation on the upper end of the price band of Rs. 275, the stock is priced at pre issue P/E of 29x on its projected annualised FY18 EPS of Rs. 9.48. Post issue, the stock is priced at a P/E of 39.97x on its EPS of Rs. 6.88. Looking at the P/B ratio at Rs.275 the stock is priced at P/B ratio of 5.41x on the pre issue book value of Rs.50.83. and on the post issue book value of Rs. 42.32 the P/B comes out to 6.82x”
SP Tulsiyan website: “Company has the old world charm of a PSU (3% dividend yield + sovereign trust), coupled with enormous potential indigenous defence companies hold. However, short term triggers depend on H2FY18 financial performance. Hence, those considering the IPO with a short term view may give it a miss. However, since defence sector holds a lot of potential, it will be incorrect to rule out this company ab initio. And for long term investors, we advise to consider the IPO.“
SSJ Finance: “BDL has reported a CAGR of 39.4% and 10.8% on revenue and net profit fronts respectively over FY2014-2017. On its upper band of price of Rs 428, the issue is priced at PE ratio of 22.7x of its H1FY2018 annualised EPS of Rs 10.8. Considering BDL is only company engaged in missile manufacturing in India and Make in India push by government should immensely benefit the company. Hence, we recommend to Subscribe the IPO.”
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.