Defence major Bharat Electronics is expected to announce its Q4 earnings on May 19. Brokerages are optimistic about the company on the back of an improving geopolitical climate, a strong order book, and focus on Make in India.
According to the average of five brokerages, the company's revenue for Q4FY25 will increase 4.3 percent year-on-year (YoY) to Rs 8,933 crore; net profit for the quarter is expected to increase 0.9 percent YoY to Rs 1,799 crore, and the EBITDA margin is expected to be muted at 25.6 percent. The net profit is skewed lower due to the estimates from Elara Securities and MOSL. Most brokerages see a 4-5 percent increase in net profit.
The most optimistic of the brokerages is Sharekhan. It estimates that the net profit will increase around xx percent YoY to Rs 1,132 crore. On the other hand, the most pessimistic estimates come from Elara and MOSL.
BEL's stock has gained around 53 percent over the past year, but declined around 30 percent over the last six months. Its total order book as on April 1st, 2025, stood at around Rs 71,650 crore, including an export order book of $359 million (about Rs 30,000 crore).
What will impact the earnings
Analysts at Nuvama note that BEL remains one of the biggest defence electronics manufacturers and compared to others in the space, has better visibility of elevated operating margins on higher indigenisation efforts, cost efficiencies, and a better product mix.
Here are some of the key drivers:
Robust order book and project mix sensitivity
Brokerages believe that BEL’s strong order book of Rs 71,700 (we’ve said 71,650 above) crore provides strong revenue visibility. However, earnings are closely tied to the timely execution of key defence programmes such as QRSAM, MRSAM, LRSAM (different types of surface-to-air missiles) and electronic warfare systems. MOSL highlights that margins are highly dependent on the project mix, which can lead to sharp quarterly fluctuations. For Q4FY25, margins are expected to contract ~340 basis points (bps) on-year to 23.3 percent due to a less favourable project mix.
Push for indigenisation and margin expansion potential
Continued efforts to indigenise modules, subsystems, and key components are expected to support long-term margin expansion. According to MOSL, this shift reduces import reliance, strengthens supply chains, and improves cost efficiency, positioning BEL well under the government's self-reliance initiatives.
High base
Analysts at both Philip Capital and Nuvama note that Q4FY25 revenue growth is likely to be muted at just 4 percent YoY due to a high base. Despite revenue momentum, EBITDA margins are expected to remain range-bound, reflecting steady but constrained profitability in the near term.
Order pipeline and working capital management
Analysts at both Philip Capital and Nuvama observed that management commentary on the large order pipeline will be a key factor. Additionally, MOSL underlines the importance of increasing export contribution and maintaining a healthy working capital cycle, especially considering BEL's significant government-linked receivables.
What to watch for
Analysts will be keeping a close eye on the order pipeline, growth visibility, and execution timelines for key projects.
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