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Execution Recovery Begins; Multi-programme Ramp-up Ahead

BDL delivered a strong recovery in Q1FY27, with revenue from operations rising 131% YoY, significantly above our estimate, as execution improved sharply from the weak FY26 base. We believe the Q1 numbers are an early indication that the FY26 execution bottleneck is beginning to ease, although quarterly performance will remain lumpy, given the milestone-based nature of missile deliveries. Importantly, the sharp improvement in revenue alongside a significant inventory build suggests that BDL is positioning inventory ahead of a stronger execution cycle rather than merely benefitting from a one-off shipment

More importantly, we see the next leg of BDL’s growth being driven by the transition of multiple missile programmes from development/procurement into volume production. The immediate trigger, in our view, is QRSAM, where CCS approval is the key remaining procedural step and an order is expected in the near term. However, we assume the revenue contribution will build gradually, as the initial QRSAM order is likely to have a 6–7 year execution cycle. Beyond QRSAM, continued execution of MRSAM/LRSAM, Astra, Akash/Akash-NG, VL-SRSAM, Nag/HELINA and MPATGM should provide multiple revenue streams across FY27–29E. We, therefore, believe the key change from FY26 is that BDL is moving towards a broader, multi-programme production cycle, which should reduce its dependence on the timing of any single programme and support a more sustained revenue recovery

We remain constructive on BDL’s multi-year growth trajectory, supported by the recovery in execution, a strong missile pipeline and increasing indigenisation across strategic weapon systems. We expect FY27–29E to mark a sharp earnings recovery as the low FY26 base normalises and multiple programmes progressively enter production, with QRSAM providing an additional growth driver as volumes scale up. Accordingly, we raise our TP to INR 1,600, valuing the stock at 40x FY28E EPS, reflecting our confidence in the company’s multi-year growth opportunity and improving execution visibility. We maintain our ‘BUY’ rating on the stock.

Strong Revenue Growth, EBITDA Improves Sharply

* Revenue for Q1FY27 up by 144.8% YoY & up by 15.8% QoQ at INR 5,657 Mn (vs CIE est. of INR 3,466 Mn)

* EBITDA stood at INR 831 Mn, up 50.3% QoQ (vs CIE est. of INR 107 Mn). EBITDA margin stood at 14.7%, expanding by 3,432 bps YoY (vs CIE est. of 3.1%)

* PAT for Q1FY27 up by 547.4% YoY and up by 4.9% QoQ at INR 1,188 Mn (vs CIE est. of INR 710 Mn). PAT margin stood at 21.0%, expanding by 1,306 bps YoY (vs CIE est. 20.5%)

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