SUBSCRIBE. IPO Report BHARAT DYNAMICS LTD. IPO Details. Research Analyst : Astha Jain

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1 IPO Report BHARAT DYNAMICS LTD SUBSCRIBE IPO Details Issue Date 13 th Mar-15 th Mar 2018 Price Band /Share* Bid Lot 35 & in multiplethereof Face Value Rs 10/Share Listing BSE, NSE Offer For Sale 22,451,953 Eq Shares Fresh Issue ---- Pre Issue Eq Shares Cr Eq Shares Post Issue Eq Shares Cr Eq shares BRLM SBI Capital Markets Ltd, IDBI Capital Markets & Co is a wholly-owned GoI company headquartered in Hyderabad and under the administrative control of the MoD, GoI and were conferred the 'Miniratna (Category -1)' status by the Department of Public Enterprises, GoI. Co is one of the leading defence PSUs in India engaged in the manufacture of Surface to Air missiles (SAMs), AntiTank Guided Missiles (ATGMs), underwater weapons, launchers, countermeasures and test equipment. Co is the sole manufacturer in India for SAMs, torpedoes, ATGMs (Source: F&S Report). Strong order book & financial performance: As of January 31, 2018, co s current order book was 105, million. Co have delivered consistent growth over the last five financial years both in terms of financial and operational metrics. Its revenue from operations and profit for the year has increased from 28, million and 4, million respectively, in Fiscal 2015 to 48, million and 4, million, respectively, in Fiscal 2017 at a CAGR of 30.43% and 5.14% respectively. Registrar Securities Ltd, Yes Securities (India) Ltd, Alankit Assignments Ltd Increase in indigenisation of co s products and implementation of the Make in India policy :Co have tie-ups with various domestic and international Original Equipment Manufacturers (OEMs) for the development of its existing and future products. Co have achieved indigenisation of upto 75 90% of the KonkursM ATGM and Milan 2T ATGM *: Discount of Rs 10/Share has been offered to retail & employees. Valuation: The co is bringing the issue at p/e multiple of on annualized H1FY18 eps at price band of Rs /share. Co with its modern facilities and infrastructure to deliver quality products in a timely manner has strong order book and established financial track record of delivering growth with experienced board and senior management team. Looking after strong future prospects of co with decent fundamentals, we recommend Subscribe on issue. Research Analyst : Astha Jain For Private Circulation Only

2 Company Overview Co is one of the leading defence PSUs in India engaged in the manufacture of Surface to Air missiles (SAMs), AntiTank Guided Missiles (ATGMs), underwater weapons, launchers, countermeasures and test equipment. Co is the sole manufacturer in India for SAMs, torpedoes, ATGMs (Source: F&S Report). Co is also the sole supplier of SAMs and ATGMs to the Indian armed forces (Source: F&S Report). Additionally, it is also engaged in the business of refurbishment and life extension of missiles manufactured. Co is also the co-development partner with the DRDO for the next generation of ATGMs and SAMs. Co is a wholly-owned GoI company headquartered in Hyderabad and under the administrative control of the MoD, GoI and were conferred the 'Mini-ratna (Category -1)' status by the Department of Public Enterprises, GoI. Founded in 1970, co have over four decades of experience in manufacturing missiles and countermeasures and its allied equipments. Co currently have three manufacturing facilities located in Hyderabad, Bhanur and Vishakhapatnam. Co s Hyderabad manufacturing unit is engaged in the manufacture of SAMs, Milan 2T ATGMs, countermeasures, launchers and test equipment. Co s Bhanur unit is engaged in the manufacture of the Konkurs M ATGMs, the INVAR (3 UBK 20) ATGMs, launchers and spares. Co s Vishakapatnam unit is engaged in the manufacture of light weight torpedoes, the C-303 anti torpedo system, countermeasures and spares. The product portfolio of BDL is composed of Bharat Dynamics Limited SAMs Torpedoes Launchers ATGMS Countermeasures Decoy Systems Test Equipment Akash Light Weight Torpedo Launcher s for Konkus- M & Milan 2T ATGMs MILAN 2T,Konkurs -M,INVAR (3 UBK 20) Chaff & flare based air defence systems, C-303 torpedo decoys Submari ne fired decoys Health monito ring equipm ent for ATGMs For Private Circulation Only \

3 Investment Rationale Strong order book and established financial track record of delivering growth As of January 31, 2018, co s current order book was 105, million. Co have delivered consistent growth over the last five financial years both in terms of financial and operational metrics. Co s revenue from operations and profit for the year has increased from 28, million and 4, million respectively, in Fiscal 2015 to 48, million and 4, million, respectively, in Fiscal 2017 at a CAGR of 30.43% and 5.14% respectively. Quality control of co s products Co s products are primarily single shot devices which calls for the highest standards of reliability. All co s manufacturing facilities have ISO 14001:2004 certifications from TUV India Private Limited. Co s Hyderabad (Akash Division) and Bhanur manufacturing units have AS 9100C certifications (based on and including ISO 9001:2008) from NVT Quality Certification Private Limited. Co s quality management systems and management system for the Hyderabad manufacturing unit have been certified ISO 9001:2008 and ISO 9001: 2015 compliant, by the IRClass Systems and Solutions Private Limited and TUV India Private Limited respectively. Increase in indigenisation of co s products and implementation of the Make in India policy In order to give an impetus to the GoI s Make in India policy, co had implemented a vendor development policy in Co have tie-ups with various domestic and international Original Equipment Manufacturers (OEMs) for the development of its existing and future products. Co have achieved indigenisation of upto 75 90% of the KonkursM ATGM and Milan 2T ATGM Risk factors Co is primarily dependent on a single customer, the Indian armed forces through the Ministry of Defence, Government of India ( MoD ). A decline or reprioritization of the Indian defence budget, the reduction in their orders, termination of contracts or failure to succeed in tendering projects and deviations in the short term and long term policies of the MoD or the Indian armed forces in the future will have a material adverse impact on co s business, financial condition, and results of operations, growth prospects and cash flows. For Private Circulation only

4 Objects of Offer The objects of the Offer are (i) to carry out the disinvestment of 22,451,953 Equity Shares by the Selling Shareholder constituting 12.25% of Company s pre-offer Equity Share capital of Company; and (ii) to achieve the benefits of listing the Equity Shares on the Stock Exchanges. Financial Statements Rs Cr Particulars FY15 FY16 FY17 H1FY18 Total Income Operating Exp EBIDTA EBIDTA Margin (%) Other Income Depreciation EBIT Interest PBT E/O Item PBT After E/O Item Tax PAT Other Comp Inc Adjusted PAT NPM(%) Eq Capital Res & Surplus Net Worth Eq Shares ( In No) EPS ROE (%) ROCE (%) Book Value For Private Circulation only

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