BEL poised to surpass FY24 order target with recent wins

BEL also secured orders worth  ₹3,335 crore for various defence systems, such as artificial magnetic conductors for airborne early warning & control systems, and uncooled thermal imaging sights (Photo: AFP)
BEL also secured orders worth 3,335 crore for various defence systems, such as artificial magnetic conductors for airborne early warning & control systems, and uncooled thermal imaging sights (Photo: AFP)

Summary

  • The company announced significant order wins totalling 3,915 crore last week, including a 580-crore order from the Indian Army for artificial magnetic conductors (AMC) used in radars.

Bharat Electronics Ltd’s (BEL) shares have been scaling new highs lately. On Monday, the state-owned aerospace and defence electronics company’s shares registered a new 52-week high to 163.25 apiece. The positive momentum is primarily followed by the announcement of significant order wins totalling 3,915 crore last week, including a 580 crore order from the Indian Army for artificial magnetic conductors (AMC) of radars. BEL secured an additional order worth 3,335 crore, which includes various defence systems, such as artificial magnetic conductors for airborne, early-warning and control systems, and uncooled thermal imaging sights. With this, BEL’s order inflow stands at 18,298 crore so far in FY24.

 

Amit Anwani, analyst, Prabhudas Lilladher, said: “The recent order win has mitigated the risk of (BEL) falling short of the order inflow guidance, bringing significant relief and enthusiasm to investors."

The company had guided for an order inflow of over 20,000 crore in FY24. ICICI Securities said going ahead, BEL will receive orders worth 6,800 crore pertaining to fuses for the Indian Army and sub-systems for naval platforms, taking total order inflows for FY24 to 25,000 crore. “As a result, we believe the management might revise up its earnings/order inflow guidance," said ICICI Securities in a note dated 7 December.

For FY24, the company guided a growth of 15-17% in revenue and 21-23% in Ebitda (earnings before interest, taxes, depreciation, and amortization) margin. For the half-year ended September (H1FY24), year-on-year revenue growth stood at 6% year-on-year and Ebitda margin was 22%.

In the past one year, BEL shares have jumped by 52% mainly due to the government’s increased spending on defence, focus on indigenization, improving share of non-defence segments, and rising exports share. Steady execution and healthy order pipeline have also helped the stock climb higher. Keeping in mind the upcoming general elections, execution of orders will be closely tracked. Moreover, there is a potential risk associated with a delay in awarding key orders, including quick reaction surface-to-air missile (QRSAM).

During the Q2 earnings call, BEL expressed confidence that big projects such as QRSAM, LRSAM (long range surface-to-air missile), radar systems, tank electronics, and tank upgrade programmes would give a major push its growth. The stock trades at 30 times estimated FY25 earnings, showed Bloomberg data.

While this may be deemed expensive, Anwani said the broader market momentum and the upward trend in defence stocks justify its valuation.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
more

topics

MINT SPECIALS

Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie