Bharat Dynamics FY26 profit falls 23.5%; Goldman Sachs cuts target to ₹1,260
Bharat Dynamics reported a 23.5% fall in FY26 net profit to ₹42,033.76 lakh with revenue declining to ₹2,44,179.18 lakh, while Q4 EBITDA slumped to ₹552M with margins at 11.5%. Goldman Sachs maintained a Sell rating with a revised target of ₹1,260, flagging the seventh consecutive year of missed execution targets, a 27% YoY revenue drop, and a 75% YoY inventory surge to ₹46.3bn, even as the order book stands strong at ₹257bn.
*this image is generated using AI for illustrative purposes only.
Bharat Dynamics Limited reported a 23.5% decline in net profit to ₹42,033.76 lakh for the financial year ended March 31, 2026, down from ₹54,964.52 lakh in the previous year. Revenue from operations fell to ₹2,44,179.18 lakh from ₹3,34,505.16 lakh in FY25, primarily driven by a decrease in sales from operations. Adding to the subdued financial performance, Goldman Sachs has maintained a Sell rating on the stock while cutting its target price to ₹1,260, citing persistent execution concerns. The Board has recommended a final dividend of ₹0.40 per share for the fiscal year, pending approval at the upcoming Annual General Meeting.
For the quarter ended March 31, 2026, the company recorded a net profit of ₹11,318.21 lakh, a significant drop from ₹27,277.19 lakh in the same period last year. Quarterly revenue from operations stood at ₹48,020.44 lakh, compared to ₹1,77,697.64 lakh in the corresponding quarter of the previous year.
Financial Performance
The company's total expenses for FY26 stood at ₹2,29,774.11 lakh compared to ₹2,94,669.07 lakh in the prior year. Employee benefits expense rose to ₹53,557.17 lakh from ₹54,879.89 lakh, while other expenses decreased to ₹46,035.97 lakh from ₹64,599.28 lakh. Finance costs were marginally higher at ₹338.72 lakh compared to ₹330.91 lakh in FY25. The following table summarises the key annual financial metrics:
| Metric: | FY26 (₹ in Lakh) | FY25 (₹ in Lakh) |
|---|---|---|
| Revenue from operations: | 2,44,179.18 | 3,34,505.16 |
| Total income: | 2,86,556.13 | 3,69,545.33 |
| Total expenses: | 2,29,774.11 | 2,94,669.07 |
| Net profit: | 42,033.76 | 54,964.52 |
| Earnings per share (₹): | 11.47 | 14.99 |
Q4 EBITDA and Margin Contraction
Operating performance in Q4 deteriorated sharply on a year-on-year basis. EBITDA for the quarter came in at ₹552M, a steep decline from ₹2.99B recorded in the same quarter of the previous year. Correspondingly, the EBITDA margin contracted to 11.5% from 16.82% in the year-ago period, reflecting the impact of lower revenue and a less favourable cost mix during the quarter. The table below captures the key Q4 performance indicators:
| Metric: | Q4 FY26 | Q4 FY25 |
|---|---|---|
| Net Profit: | ₹1.13B | ₹2.73B |
| Revenue: | ₹4.8B | ₹17.77B |
| EBITDA: | ₹552M | ₹2.99B |
| EBITDA Margin: | 11.5% | 16.82% |
Goldman Sachs Analyst View
Goldman Sachs has maintained its Sell rating on Bharat Dynamics while cutting its target price to ₹1,260, pointing to persistent execution challenges. The brokerage noted that the company missed its expected execution targets for the seventh consecutive year, attributing the shortfall to domestic supply-chain issues and overseas component shortages. As a result, FY26 revenue declined 27% year-on-year and inventory surged 75% year-on-year to ₹46.3bn. Despite these near-term headwinds, the order book remains strong at ₹257bn, with FY27 inflows expected around ₹140bn. Goldman Sachs identified execution ramp-up as the key monitorable ahead for the company.
| Parameter: | Details |
|---|---|
| Rating: | Sell |
| Target Price: | ₹1,260 |
| FY26 Revenue Change (YoY): | -27% |
| Inventory Change (YoY): | +75% to ₹46.3bn |
| Order Book: | ₹257bn |
| FY27 Inflows Expected: | ~₹140bn |
Dividend and Corporate Governance
The Board of Directors recommended a final dividend of ₹0.40 per equity share of ₹5 each for FY26. An interim dividend of ₹4.50 per share was already paid in February 2026. The final dividend will be paid within 30 days of the Annual General Meeting.
Statutory auditors Tej Raj & Pal issued an unmodified opinion on the audited financial results. However, the auditors noted that the composition of the Board was not in compliance with Section 149 of the Companies Act, 2013, and SEBI LODR Regulations due to the non-availability of the requisite number of Independent Directors. Consequently, the Audit Committee and other committees were suspended. The company stated that the appointment of directors is under the purview of the Government of India and is currently under process.
Disclosures and Notes
Inventories included non-moving items worth ₹8,327.07 lakh for more than five years. No provision for redundancy was made as advances received against these contracts exceeded the value of the assets. The company also assessed the financial impact of new Labour Codes, resulting in an additional liability of ₹703.65 lakh. The financial results are subject to supplementary audit by the Comptroller and Auditor General of India.
Historical Stock Returns for Bharat Dynamics
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -6.05% | -7.61% | -13.42% | -19.93% | -38.54% | +552.90% |
What specific measures is management taking to resolve domestic supply-chain bottlenecks and overseas component shortages to reverse the trend of missed execution targets?
How will the 75% surge in inventory levels impact working capital requirements, and does the company anticipate significant write-downs for the non-moving items identified by auditors?
What is the expected timeline for the Government of India to appoint the requisite Independent Directors to restore compliance with SEBI LODR Regulations and reactivate the Audit Committee?
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