Buy Bharat Electronics; target of Rs 150: ICICI Securities

ICICI Securities research report on Bharat Electronics

Bharat Electronics (BEL) has won orders worth Rs59bn thus far in Q1FY24. This is in line with the management’s guidance of Rs200bn of order inflow in FY24 and implies orderbook at the end of Q1FY24 is likely to be higher compared to Q4FY23 level of Rs606.9bn. We expect orders for fuses (for long-term requirement of Indian Army) and Naval platforms during the course of FY24. In our view, with its finger in the pie in almost all the upcoming major orders over the next few years, BEL is the best play in defence space. We expect the execution of the recently won orders to commence from FY25, resulting in comfortable bill-to-book position in FY24. Taking cognisance of robust order inflow as well as book-to-bill position, we raise our P/E multiple to 27x (earlier 25x), corresponding to 3.5 deviations (earlier 3 deviations) above the past 10-year mean.

Outlook

We maintain BUY rating on BEL stock with a revised TP of Rs150 (earlier Rs140) and continue to recommend it as our top pick in defence space.