Buy Bharat Electronics; target of Rs 210: Motilal Oswal

Motilal Oswal's research report on Bharat Electronics

BHE reported revenue of INR 17.2b (+98% YoY; our estimate: INR 12b) and operating profit of INR 1.6b (v/s loss of INR 0.5b in 1QFY17; our estimate: loss of INR 0.2b). Net profit rose 247% YoY to INR 1.3b. Exports were USD4.4m (INR 286m).

Outlook

We raise our estimates by 3% for FY18 and by 2% for FY19 to factor in improvement in execution. We retain our Buy rating and marginally raise our target price to INR 210 (25x FY19E EPS, which is its peak historical valuation multiple) to factor in improved pace of decision making in the defense sector, and better order visibility and execution.