Bharat Dynamics IPO

Bharat Dynamics IPO

Bharat Dynamics IPO
8.2

Company Background

8.0 /10

Price Band

7.5 /10

Company Financials

9.0 /10

Industry Situation

8.0 /10

Reliability

8.5 /10

Pros

  • Strong Financials
  • Government-backed Company
  • No Domestic Competition
  • Option to Export

Cons

  • High Dependency on R&D
  • Only Client - Indian Army, No Exports yet
IPO Name Bharat Dynamics IPO Bharat Dynamics IPO
Opening Date 13th March, 2018
Shares Issue Size 22,451,953 22,451,953
Face Value ₹10
IPO Price Band ₹413 - ₹428 413.00-428.00
Bid Lot 35
Total Bid Amount ₹14,455 - ₹14,980
Listing At NSE, BSE
Retail Allocation 35%
Estimated IPO Size ₹927.27 - ₹960.94 Crore
Day# No. of Shares Subscribed Shares Subscription %age
Day 1 NA NA
Day 2 NA NA
Day 3 NA NA

 

Bharat Dynamics Background

Bharat Dynamics Limited is one of the Public Sector Undertakings (PSUs) that was established back in the year 1970 for the manufacturing of missile systems and ammunition. It was established by a small team in Hyderabad and today, the company has its manufacturing units in Bhannur and Vizag. It is looking to set up a couple of more manufacturing units in Telangana and Maharashtra.

It sounds amazing to see that its initial team had engineers from Defence Research and Development Organisation (DRDO) and this team ended up building the first generation Anti-tank missile. Now, the company develops and launches much more sophisticated armoury products.

Some of the prominent missiles Bharat Dynamics has delivered in the past include Agni, Akash, Milan 2T, Konkurs M etc. Most of these missiles have achieved several feats since their development and have helped Indian Army in multiple situations. Apart from these, there are multiple tanks and other related ammunition that Bharat Dynamics has developed since its inception.

In fact, specifically for the missile Akash (mentioned above), Indian Army placed an order of ₹14,180 Crore. This gives you an idea of the potential revenue scale this PSU can look up to.

Now, in March 2018, Bharat Dynamics Limited or BDL is looking to raise an IPO in order to fulfil some of its long driven goals. In this detailed Bharat Dynamics IPO review article, we will be talking about several aspects related to this PSU, the objectives of the IPO, the financial details of the company before we provide our opinion on whether to go ahead and invest in this IPO or not.

This Book Building process based Bharat Dynamics IPO is being managed by SBI Capital Markets Limited, IDBI Capital Markets & Securities Limited and YES Securities (India) Limited.

Bharat Dynamics Management

Since the year of its inception, Bharat Dynamics has seen a total of 5 Chairmen and 14 Managing Directors. Currently, this position is held by Shri V Udaya Bhaskar along with a team of 3 Whole time directors, 5 Independent directors along with 1 Director appointed by the Indian Government, Ministry of Defence to be specific.

Here is a quick look at the profiles of the top management for your reference:

 

 

Do not overlook this information as this is one of the most important aspects you should be validating before investing your hard earned money into an IPO. The experience, educational background, achievements etc. tell you a story that the numbers or data points might not. At the same time, if you are somebody who is new and does not understand how to go about it, you can check this detailed review on How to Apply an IPO.

At the end of the day, these are some of those people who are going to utilize (or waste, sic) your investments in the company. Thus, remember to spend some of your time understanding their backgrounds before making a jumpy decision.

Bharat Dynamics IPO Data Points

Let’s move ahead from the business background and see what Bharat Dynamics IPO has to offer to a retail investor.

Bharat Dynamics IPO is sized at a ₹900 Crore plus value with its IPO price band in the range of ₹413 to ₹428. This makes a single bid valued in the range of ₹14,455 to ₹14,980 with 35 shares in a single lot. Further bidding can be done in multiples of 35 shares in a single bid.

Furthermore, as you know that as a retail investor, you can bid for a maximum of ₹2 Lakh worth of the amount with a single PAN card. Some investors always have a query on whether they can place Multiple IPO bids. You may click the link to know about this concern of yours, if applicable.

The overall issue size consists of 22,451,953 shares with 35% retail allocation. The total number of shares opened in this issue makeup 12% of the overall company valuation. Furthermore, the management has reserved 458,203 shares for employee allocation based on their eligibility.

Bharat Dynamics Financial Performance

 

As you can see in the table above, Bharat Dynamics is one of those few government-backed (PSU) companies that have shown consistent growth in revenue as well as net profit. If we look at the last 5 years, Bharat Dynamics has shown an improvement of at least 3 times in its revenue while the profit grew by an overall 75% from 2013 to 2017.

This is more than just-average performance for the simple reason that this industry requires a huge amount of Research & Development. While the R&D costs can work for a company but they can hurt real bad if they don’t.

Furthermore, the costs associated to run the business operations of such a company are no less either.

Another good aspect related to Bharat Dynamics business is that the clientele working with the company is pretty much going to stick with the business. To put in simpler words, Bharat Dynamics financial picture looks pretty healthy and to put in numbers, the company had a book value of ₹11,164 Crore in September 2017.

Bharat Dynamics IPO Objective

The objective of this IPO is pretty straightforward.

The business is profitable and has all the money to use for any kind of expansion plans. Through this particular IPO, Government is looking to dilute some of its equity or stake in the company.

However, the company looks to expand on multiple fronts based on its existing cash-flow. Some of the plans Bharat Dynamics is looking to materialize in the coming future include:

  • Bharat Dynamics is looking to launch a couple of Surface to Missile manufacturing facilities in Maharashtra & Telangana.
  • It is looking to leverage automation mechanisms in some of its existing facilities in order to increase its productivity and thus, revenue.
  • With increased focus & budget towards Research and Development, Bharat Dynamics is looking to expand its product portfolio and most likely will be coming up with few new offerings in the next 1-2 years. For this, Bharat Dynamics has set-up RF Labs, Laser labs, Aero-dynamic labs with an increased budget of around ₹34.7 Crore.
  • Apart from India, Bharat Dynamics is looking to increase its Global footprint as well in terms of export. With this, the reliance of Bharat Dynamics on Indian Armed forces will decrease and it will be open to export products such as s Akash SAM, lightweight torpedoes and countermeasure dispensing systems.
  • Set-up a Test Firing Range in Rachakonda, Telangana which will be directly impacting the company’s cost efficiencies and operational advantages.

Simply, said Bharat Dynamics has a lot in its plate for the next few years which will invariably be impacting its financial performance in the positive direction.

Bharat Dynamics IPO Events

Here are some of the important dates you need to be aware of, in case you are looking forward to applying for this IPO:

Event Date
IPO Open Date 13th March, 2018
IPO Close Date 15th March, 2018
Finalization of Basis of Allotment 22nd March, 2018
Initiation of Refund 23rd March, 2018
Credit of Shares to Demat Accounts 26th March, 2018
Listing on Exchange 27th March, 2018

 

As shown above, the IPO opens up for bidding on 13th March 2018 and will stay open for bidding until 15th March 2018. Then most likely by 22nd March, the decision on finalization of allotment will be done which will be followed by shares getting credited to your demat account by 26th March 2018.

In the meantime, in case you do not get any allotment, your blocked money in your bank account (assuming you used ASBA for IPO application) will be unblocked by 23rd March 2018 itself.

Finally, Bharat Dynamics will be getting listed on NSE and BSE on 27th March 2018.

Here are some pictures from Bharat Dynamics IPO Press Conference (credits Bharat Dynamics):

Bharat Dynamics Contact Information

In case you are looking to extract more information or just want to have more details about Bharat Dynamics before you go ahead with your IPO application, here are the contact details of the business for your reference:

Bharat Dynamics Limited

Corporate office, Plot No. 38-39,
TSFC Building (Near ICICI Towers), Financial District, Gachibowli, Hyderabad,
Telangana(State) – 500032

For more information, you can use these details:

 

Bharat Dynamics IPO Recommendation*

If we just look at the financial performance and the background of the company, there is no doubt that it is an absolute BUY. The business has been around for a while, it has shown consistent growth both at top and bottom line levels. Furthermore, the clientele is going to be long-term and thus, it all comes down to the level of Research & Development Bharat Dynamics can open itself to.

There is only a small concern that has arisen in the recent days. The scams in the Indian Government-backed banks such as PNB (Punjab National Bank) has diverted the mood of the market towards negativity. Thus, an investor now looks at a Government-backed entity with a little suspicion.

Having said that, these are different industries we are talking about and the Bharat Dynamics has justified its performance, at least in the last 5 years.

Thus, our take on this Bharay Dynamics IPO is a certain BUY at both short and long-term investment levels.

All the best!


* The recommendation is just our viewpoint and you are advised to check with your financial advisory and/or stockbroker before investing any money in this IPO. A Digital Blogger bears no responsibility in such investments and the corresponding profits/losses.

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