Prabhudas Lilladher's research report on Bharat Electronics
Management in its recent conference call highlighted that FY23 order pipeline remains healthy, with expected orders such as Akash missile system, warfare system, radars, naval fire control system etc. and the company expects to bag orders worth ~Rs200bn. Given robust order book (Rs553.3bn, 3.3xTTM revenue), management guided for revenue growth of ~15% with EBITDA margin in range of 21-23% for FY23. Exports opportunity stands strong and management expect to bag orders of ~US$400-450mn in FY23 vs US$180mn in FY22. Company has also been focusing on diversifying in non-defense verticals such as EV, metros, electronic warfare, healthcare, homeland security etc. Capex of ~Rs30bn has been planned for capacity expansion of which Rs20bn has already been completed and ~Rs10bn is expected to be incurred in FY23.
Outlook
We remain positive on long term growth story of BEL given 1) its strong order backlog, 2) order pipeline and 3) diversification in newer business verticals like EV battery, Medical equipments, Metro, focus on exports market, government focus on product indigenization etc. We have revised our earnings estimate by 1.9%/3.4% for FY23/24 factoring in higher other income. The stock is currently trading at 22.9x/19.1x FY23/24E. Maintain ‘Buy’ rating on stock with revised TP of Rs295 (Rs285 earlier) valuing it at PE of 21x FY24E (same as earlier).
More Info
At 17:30 Bharat Electronics was quoting at Rs 268.85, up Rs 14.00, or 5.49 percent.
It has touched an intraday high of Rs 269.75 and an intraday low of Rs 254.45.
It was trading with volumes of 503,603 shares, compared to its thirty day average of 265,149 shares, an increase of 89.93 percent.
In the previous trading session, the share closed down 0.10 percent or Rs 0.25 at Rs 254.85.
The share touched its 52-week high Rs 269.75 and 52-week low Rs 162.40 on 21 July, 2022 and 09 August, 2021, respectively.
Currently, it is trading 0.33 percent below its 52-week high and 65.55 percent above its 52-week low.
Market capitalisation stands at Rs 65,507.80 crore.
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