Motilal Oswal's research report on Bharat Electronics
BHE’s performance was ahead of our estimates during 1QFY25. Revenue grew 20% YoY to INR42b (est. INR37.8b), led by strong execution of the order book. Gross margin was up ~190bp YoY at 45.4%. EBITDA grew 41% YoY to INR9.4b, with margin at 22.3%, up ~240bp YoY. PAT grew 46% YoY to INR7.7b (4% beat). The order book stood at INR767b, up 17% YoY. Order inflows stood at INR49.6b, down YoY. Order inflows were diversified across BMP 2 upgrade, T/R module, MPR radar, Akash AMC, CMS system, spares for ships etc. The company has maintained its guidance of 15% growth in revenue and EBITDA margins in the range of 22-23% for FY25. It has also maintained its order inflow guidance of INR250b each for FY25/FY26, excluding the QRSAM project.
Outlook
BHE is currently trading at 39.4x/32.5x on FY26E/FY27E EPS. We maintain our two-year forward TP of INR360 and maintain BUY rating on BHE.
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