Defence Stock to Buy: Motilal Oswal projects 32% upside after Q2 results

Brokerage firm Motilal Oswal has reiterated its “buy” call on Bharat Dynamics Ltd. (BDL) after the state-owned defence manufacturer posted a strong September quarter performance. The firm also raised its price target to Rs 2,000 from Rs 1,900, signalling a potential upside of 32 per cent from Thursday’s closing price.

Execution improves as supply chain pressures ease

BDL reported its Q2 results after market hours on Thursday. According to analysts, the easing of supply chain constraints helped the company accelerate its execution pace, contributing to a solid quarterly showing. Margins, however, remained under pressure due to the mix of ongoing projects — a factor the brokerage believes will improve gradually.

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Adding to its momentum, Bharat Dynamics announced a fresh order worth Rs 2,000 crore for Invar anti-tank missiles. Motilal Oswal noted that the company stands to benefit meaningfully from emergency procurement activity in the defence sector.

Strong growth outlook backed by robust order book

The brokerage expects the company to record strong financial growth over the next three years. Revenue, EBITDA and net profit are projected to grow at a compounded annual growth rate of 35 per cent, 64 per cent and 51 per cent, respectively, between FY25 and FY28.

“Going forward, we expect execution growth to remain strong, driven by a healthy order book, and also expect margins to improve as the operating leverage kicks in,” the firm wrote in its report.

Choice broking also positive on the stock

Choice Broking echoed the optimistic outlook, maintaining its “buy” rating with a price target of Rs 1,965. The brokerage has valued the stock at 35 times estimated FY27–FY28 earnings per share, citing the company’s order visibility and sustained demand in the defence segment.

Shares of Bharat Dynamics closed 1.1 per cent lower on Thursday at Rs 1,516. The stock has gained 34 per cent so far in 2025.