Bharat Dynamics Limited: FY26 saw lower revenue, but order book stayed strong

Bharat Dynamics Limited, a Government of India enterprise under the Ministry of Defence, entered FY26 with a large order book and a focus on indigenised weapon systems. The company’s FY26 financials, however, show a weaker revenue and profitability profile compared to FY25, even as the order pipeline and working capital receivables improved.

Revenue from operations declined to INR 2,441.79 crore in FY26 from INR 3,345.05 crore in FY25, a year-on-year drop of 27 percent as highlighted in the presentation. Value of production also reduced to INR 3,214.85 crore from INR 3,766.91 crore.

Despite the lower revenue base, the presentation reports a PAT margin of 17.2 percent in FY26 versus 16.4 percent in FY25. Profit after tax stood at INR 420.33 crore in FY26 compared with INR 549.64 crore in FY25. Return on equity moderated to 10.2 percent in FY26 from 14.4 percent in FY25.

Order book remained supportive, with a sizable pipeline

The central support in the presentation is the order book. As of 31 March 2026, BDL reported a total order book of INR 26,176 crore, up from INR 22,814 crore as of 1 April 2025. New orders received during FY 2025-26 were INR 5,909 crore. The company also disclosed an order pipeline of around INR 15,000 crore in the current financial year.

Exports were presented as an area of focus, though the disclosed export order position was relatively small at around INR 417 crore as of 31 March 2026. The company listed potential export products, including Akash SAM, Light Weight Torpedo, CMDS, NAG, KonkurS M, SAAW, Astra, and Helina or Dhruvastra.

Margins and profitability softened at the operating level

While PAT margin was presented as higher, operating profitability compressed materially in FY26. EBITDA declined to INR 223.4 crore from INR 472.3 crore in FY25, and EBITDA margin fell to 9.1 percent from 14.1 percent.

The financial summary also shows profit before tax at INR 567.82 crore in FY26 versus INR 748.76 crore in FY25. Earnings per share reduced to INR 11.47 from INR 14.99.

Financial summary (standalone figures as presented)

Working capital: receivables improved, but inventory spiked

A notable positive in FY26 was the sharp reduction in trade receivables. Receivables fell to INR 727.04 crore in FY26 from INR 1,610.40 crore in FY25, and receivable days improved to 109 from 183.

However, the presentation also shows a large build-up in inventory. Inventory increased to INR 4,625.64 crore in FY26 from INR 2,645.11 crore in FY25. Inventory days rose sharply to 691 in FY26 from 289 in FY25. This is a key movement because it indicates materially higher capital tied up in stock, even as the company reported a lower revenue base in the year.

Higher R&D intensity and focus on indigenisation

BDL’s R&D spending remained elevated. The presentation reported R&D expenditure of INR 198.23 crore in FY26, with R&D as a percentage of revenue rising to 8.1 percent from 6.7 percent in FY25. This is a multi-year shift compared with FY22, where R&D as a share of revenue was reported at 1.7 percent.

The company also reiterated its positioning as a weapon system integrator with multi-product and multi-location presence, supported by certifications including AS 9100D and ISO 9001:2015, ISO 27001:2022, and ISO 14001:2015. It stated that all major projects have indigenisation levels of more than 80 percent to 90 percent and highlighted a focus on partnering across DPSUs, DRDO, private defence industry, MSMEs, and start-ups.

Dividend policy signals continuity, not acceleration

The presentation disclosed total dividend of INR 180 crore in FY26 versus INR 170 crore in FY25. Dividend payout ratio increased to 42.8 percent in FY26 from 30.9 percent in FY25. Dividend per share in FY26 was INR 4.90 compared to INR 4.65 in FY25.

Takeaways from the June 2026 investor presentation

The June 2026 investor presentation shows a company with strong demand visibility through a large and growing order book, and improved receivable collection in FY26. At the same time, FY26 operating performance weakened, with lower revenue, lower EBITDA, and a steep build-up in inventory.

For investors, the key monitorables from the disclosed data are the conversion of the INR 26,176 crore order book into revenue, the pace of inventory normalisation given the rise to 691 inventory days, and whether higher R&D intensity translates into scalable product execution and exports beyond the INR 417 crore export order position disclosed as of 31 March 2026.