ICICI Securities research report on Bharat Electronics
Bharat Electronics’ (BEL) Q4FY25/FY25 performance was above our and consensus estimates. Key points: 1) Guidance exceeded for both revenue growth and EBITDA margin. 2) FY25 order inflow (OI) at INR 193bn, and end-FY25 order book (OB) at INR 716bn (defence ~88–89%). 3) Working capital rose in FY25, mainly due to order spill-over to FY26. Management expects a revenue CAGR of 15–17.5% and a PAT CAGR of >20% through to next 4–5 years. Taking cognizance of BEL’s FY25 performance, we raise our FY26E/FY27E EPS by 6%/7%.
Outlook
Further, we raise the multiple to 45x (earlier 40x) owing to better visibility on order funnel (including emergency procurement) in light of the current geopolitical situation. Our revised TP works out to INR 420 (earlier INR 350) based on 45x FY27E EPS. Maintain BUY.
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