Issue Date:?13th Mar ? 15th Mar 2018
Price Band(Rs):?413-428 |??Lot Size (No. of Share):?35
Company Background
Incorporated in 1970, Bharat Dynamics Ltd is Hyderabad based wholly-owned GoI company engaged in the manufacture of Surface to Air missiles (SAMs), Anti-Tank Guided Missiles (ATGMs), underwater weapons, launchers, countermeasures and test equipment. Bharat Dynamic have three manufacturing facilities located in Hyderabad, Bhanur and Vishakhapatnam. Company is the sole manufacturer and supplier in India.
Issue Details
| Issue Opens | 13-Mar-18 |
| Issue Closes | 15-Mar-18 |
| Issue Size(Rs in Crore) | 960.94 |
| Face value(per equity share) | 10 |
| Price Band(Rs.) | 413-428 |
| Lot Size(No of Share) | 35 |
| No of Shares on Offer(Crore) | 2.24 |
| QIB(%) | 50% |
| Non-Institutional(%) | 15% |
| Retail(%) | 35% |
| Commencement of Trading | 23-Mar-18 |
Strengths
- Increase in indigenisation of our products and implementation of the ‘Make in India’ policy.
- Strong order book and established financial track record of delivering growth.
- Strong expertise in missiles, integrated infrastructure provide BDL significant edge over any upcoming competition.
Concerns
- Dependence on single customer ? Indian armed forces.
- Competition from other players, especially private sector.
- Increase in price of raw materials and its dependence on suppliers.
- Delays in award of long-term contracts or cancellation/modification of existing contracts.
Our View
The price band of INR 413-428 per share and FY17 EPS of Rs.21.57, P/E ratio works out to 19.8x to 22x. There are no listed peers. If we consider 22x P/E in general, the IPO price can be considered as fully priced.
Bharat Dynamics has a dominant position as a government-owned defense enterprise. The company has robust order book, Strong return ratios, best-in-class execution capabilities, strong growth track and a leverage-free balance sheet. We believe BDL will take full benefits of Make in India? initiative which inline will boost investor confidence to invest. Hence, considering the brand of Mini Rathna and all other positive factors, investors can invest in this IPO for long term.