Bharat Electronics shares closed 2.7 percent higher on October 27 at Rs 108 after reporting a decent set of earnings for the quarter ended September 30 with strong revenue visibility on the back of a healthy order book.
The company’s standalone profit after tax was at Rs 611.05 crore, down 0.25 percent from the year-ago quarter, impacted by higher input cost. Standalone revenue from operations grew 7.8 percent year-on-year to Rs 3,946 crore led by healthy order book execution.
The Navratna defence PSU said its order book position as on October 1, 2022 stood at Rs 52,795 crore.
Analysts maintained their "buy" call on the stock.
"Bharat Electronics delivered a decent performance in Q2FY23 in a challenging times. Order book at 3.1 times its TTM (trailing twelve month) revenue provides a healthy revenue visibility," Arafat Saiyed, Senior Research Analyst at Reliance Securities said. The order inflow for Q2FY23, however, declined 62 percent to Rs 1,420 crore.
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At the operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) were flat at Rs 856 crore and the margin fell 171 bps year-on-year to 21.68 percent for the September FY23 quarter, which was near the higher band of management guidance of 20-22 percent.
In the half year ended September 30, standalone profit increased by 67 percent to Rs 1,042.5 crore and revenue from operations jumped 33 percent to Rs 7,058.6 crore from the year-ago period.
Reliance Securities maintained its positive stance on BEL'’s long-term prospects on robust defence spending, strong expertise and relationship with government entities and diversification into non-defence business.
The brokerage expects the company to clock a double-digit growth over the next couple of years, aided by business opportunities in both defence and non-defence segments.
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A debt-free balance sheet, efficient working capital management, adequate R&D spend, technology adoption, track record of timely execution of large projects, strong cash flow and prudent capital allocation, augurs well for the company, it said.
Reliance Securities has a “buy” rating on the stock, Saiyed said.
Prabhudas Lilladher, too, has a “buy” rating on the stock with a target price of Rs 125.
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