Bharat Dynamics Shares Tank 7% After 10-Day Winning Streak – Is This the End of the Rally?

Bharat Dynamics Limited (BDL) shares fell by 7% to ₹1,431 on May 28, ending a ten-day winning streak as investors took profits after a strong rally. At around 10:45 am, the shares were trading at ₹1,459, up 5.5% from the previous close on the NSE. In the past month, BDL shares have increased by 45%.

Recent Stock Split

BDL recently announced its first-ever stock split, dividing one equity share with a face value of ₹10 into two shares with a face value of ₹5 each. The company stated that this move aims to comply with the Department of Investment and Public Asset Management’s (DIPAM) guidelines on capital restructuring. The split is also intended to attract more small investors and improve the liquidity of the shares.

Surge in Defence Stocks

BDL is not the only defence stock seeing a recent surge. The ‘Make in India’ initiative and rising geopolitical tensions involving Russia, Ukraine, the Middle East, and US-China relations have benefited the sector. Hindustan Aeronautics Limited and Data Patterns India Limited have gained 65% and 17%, respectively, in the last three months.

Future of Defence Spending

According to an April report by Jefferies, India’s capital expenditure on defence is expected to maintain a 7-8% Compound Annual Growth Rate (CAGR) observed over the last decade. With a push for indigenization, domestic defence spending could grow in double digits. Jefferies also noted that if domestic defence expenditure doubles from FY24 to FY30, stock prices in this sector could continue to rise.

Upcoming Results

BDL will announce its fiscal fourth-quarter results on May 30.