Buy Bharat Electronics; target of Rs 1450: Motilal Oswal

Post strong order inflow of INR 170b in FY16, the management has guided orders worth INR 120b-150b in FY17 (our estimate: INR 135b; five-year average: INR 79b). Key orders wins expected in FY17 include: (a) hand-held thermal imagers, (b) electronic warfare systems for the Indian Army, and (c) network-centric systems for the P15 Bravo ships. The Akash weapon systems order worth INR 50b-60b along with the LR SAM (Barrak 8) is likely to slip to FY18. Annual order inflows over the next 2-3 years are expected to remain in the range of INR 100b-150b, as there is a strong pipeline of nomination-based orders.  

We expect BHE to report EPS of INR 62 in FY17 and INR 69 in FY18. Maintain Buy; our target price is INR 1,450 (21x FY18E EPS). Key triggers are accelerated decision making toward large defense procurements and increased indigenization. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.