Bharat Electronics Soars 9%, Market Cap Exceeds Rs 2 Trillion on Strong Q4

by | May 21, 2024 | 0 comments

The stock of the state-owned defense company has been rising for six consecutive trading days, surging by 26 percent during this period.

Bharat Electronics Limited (BEL) stock closed at Rs 282, up 9% on the BSE in intra-day trade on Tuesday. It rose sharply after reporting strong Q4 numbers. The company’s profit after tax (PAT) went up by 30.6% YoY to Rs 1,783 crore for the quarter ended March 2024.

Steady Growth and Market Cap

This state-run defence PSU has seen a continuous rise in its share price for sixth session in a row, which propelled its market capitalisation beyond the Rs 2 lakh crore mark for the first time ever. At 09:24 am, BEL was trading 8.9% higher at Rs 281.85 with m-cap of Rs 2.06 lakh crore while the S&P BSE Sensex was down 0.1% at 73,929.

Strong Financial Performance in Q4FY24

BEL’s revenue from operations came at Rs 8,564 crore during January-March, up 32.6 per cent YoY and higher by106 per cent QoQ (quarter-on-quarter). EBITDA margin declined by156 basis points (bps) YoY but improved by94 bps QoQto26.7%.

The company showed significant execution improvement in Q4FY24 on back of strong order inflow during H2FY23 and H1FY24 and strong execution that led to revenue growth of 33% YoY in Q4 FY24 vis-à-vis 5% pataccountedforin first nine months of this fiscal (9 MFY 24).

Read Alos: India Cements’ Q4 Net Loss Narrows to Rs 29 Crore YoY

Leader In Defense Electronics Segment

Bharat Electronics is an aerospace and defense electronics company which manufactures advanced electronics products.The Company’s product range includes radar systems; missile systems; electronic warfare & avionics; anti-submarine warfare systems; electro optics; homeland security solutions; and various civilian products.

Operational Performance Beats Estimates

BEL’s overall operational performance for FY24 stood ahead of estimates. EBITDA margin for the year came at 24.9% which is higher than expected around 23%. Revenue growth of about4% YoYforFY24 was in line with the previously reported provisional revenue.

Robust Order Inflows & Healthy Backlog

BEL received strong order inflows worth Rs 35,512 crore in FY24 compared to Rs 19,000-20,000 crore clocked in both FY22 and FY23.The order backlog stands at Rs 75,934 crore i.e.3.7 times ofFY24 revenue which indicates healthy revenue growth visibility going forward.

Order pipeline remains robust in defence like electronic warfare (EW), radars, communication, navigation systems (CNS) and non-defence and exports segments too are seeing good traction.

Strategic Positioning & Outlook

According to ICICI Securities, BEL is well positioned to capture a major pie of growing Indian defense/space electronics system/sub-systems/components industry (expected to grow at CAGR of13-14% overFY22-27). The share of defence electronics in total defence production is expected to increase to40-42% byFY27 from36-37% currently.BEL should be biggest beneficiary backed by its strong technical expertise and capabilities spanning across design-development-manufacturing wide range strategic electronic products/systems etc.

Healthy order book gives earnings visibility coupled with robust pipeline.Also company’s strategy diversify into non-defense sectors /increase exports/services share would aid long term growth besides mitigating business risks.

Motilal Oswal Financial Services (MOFSL) expects that increasing indigenization in defense will make BEL a key player. Localization accounts for larger percentages of the Indian defense industry every year; however, it is expected that even after reaching its peak MOFSL still forecasts this to be about 12-13%. The corporation is actively pursing non-defense revenue streams and looking into different ways they can develop their export side.

For example MOFSL has also upped its valuation multiples on BEL so as to incorporate bigger market shares with benefits from tech tie ups through MoUs as well as improved ratios between exports/non-defence against total sales among other things.

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According to Q4FY24 results, Bharat Electronics’ strong performance and position within markets indicate great potential for growth at the company level which was again shown by impressive numbers during this last quarter alone. With healthy order books across industries such as defence or aerospace electronics where positive outlooks prevail due strategic diversifications; it seems like there won’t be any stopping them soon enough – not only nationally but internationally too!


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