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BHARAT ELECTRONICS
LIMITED
A quick analysis by Mr. Avigyan Mitra

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Bharat Electronics Limited (BEL) is a
Navratna PSU under the Ministry of
Defence, Government of India. It
manufactures state-of-the-art electronic
products and systems for the Army, Navy
and the Air Force. BEL has also diversified
into various areas like homeland security
solutions, smart cities, e-governance
solutions, space electronics including
satellite integration, energy storage
products including e-vehicle charging
stations, solar, network & cyber security,
railways & metro solutions, airport
solutions, Electronic Voting Machines,
telecom products, passive night vision
devices, medical electronics, composites
and software solutions.
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Revenue grew 12% yoy to Rs 41.31bn (3-yr CAGR of 22%)
& came 5% ahead of consensus estimates. (in line with PC
estimates)
Order backlog stood at Rs 501bn (-11% yoy, 3-yr CAGR of
-3%). Implied order inflow for the quarter was at Rs
13.7bn, -76% yoy.
Gross profit increased 15% yoy as gross margins
improved 109bps yoy to 41.5%.
EBITDA increased to Rs 8.5bn, +4% yoy (-8%/ -1% vs PC/
Consensus estimate, 3-yr CAGR of 34%). EBITDA margin
contracted by 160bps yoy to 20.7% (-183bps/ -128bps vs
PC/ Consensus estimate) as other expenses as % of sales
jumped 259bps yoy.
Recurring PAT increased 3% yoy to Rs 5.9bn (-11%/ -6% vs
PC/ Consensus estimate, 3-yr CAGR of 40%) as other
income was down 3% yoy while depreciation increased
9% yoy.
Upgrade in revenue growth guidance for FY23 & FY24 to
15-20% (+ve bias for upper end)
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Slide Subtitle

4.
Major orders expected in Q4FY23:
1) AKASH Prime missile order worth Rs
40bn,
2) Himshakti Electronic Warfare (EW)
worth Rs 32bn,
3) BMP-II Upgrades worth Rs 18bn,
4) Arudhra Radar worth Rs 30bn,
5) AMC contracts for AKASH/ IACCS worth Rs
6bn,
6) EW suites of Mi-17 helicopters worth Rs 15bn.
In addition, BEL has prospects worth Rs 700-
800bn are in pipeline over the next 3 years which
includes, i) EW systems: Rs 200bn, ii) Missiles
systems (QRSAM, LRSAM, MRSAM): Rs 400-500bn,
iii) Naval Equipment (Radar, Sonar, Combat
management system, and communication
system): Rs 200bn, iv) Non-defence biz (EVM/
VVPAT, Smart Infra, Mobility, Medical Electronics &
exports): Rs 80-100bn and vi) RF/ IR seekers,
Unmanned systems, glide bombs & ammunition
fuses.
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• Delay in order
finalization,
• Gross margin dilution
• Higher competitive
intensity
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11.
• Bharat Electronics (BEL) has delivered robust
operating performance during 9MFY23 with
Sales/ EBITDA/ PAT growth of 24%/ 28%/
36% YoY respectively
• Management expects order inflow worth Rs
140-160bn in Q4FY23 as it has concluded
P&C for contracts worth Rs 120bn
• We believe that BEL is entering in a phase
where it could potentially win > Rs 250bn
worth of orders every year for the next four
years, as large projects such as QRSAM,
MRSAM, Akash Prime and LRSAM become
due for award over FY22-25.
• We also think, EBITDA margin to move
upward of 23% over FY24-FY25 due to
improved learning curve for previous
technology absorption programs, better
operating leverage and the defence
indigenization mandate which will
create a domestic ecosystem, resulting
in lower procurement costs and faster
approvals.
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