The Navratna Defense PSU reported a 30% increase in consolidated net profit, totaling ₹1,797 crore compared to ₹1,382 crore in the same period last year. Revenue from operations for the quarter grew by 32.18% year-on-year to ₹8,564 crore.
For the full fiscal year (FY24), the company reported consolidated revenue from operations of ₹20,268 crore, up from ₹17,734 crore, marking a 14.28% increase. Net profit for FY24 rose by 33.45% to ₹3,985 crore, compared to ₹2,986 crore in FY23.
Also Read: Elara Securities raises target price of HAL, share rallied over 120% in 6 months
In FY24, BEL successfully secured orders worth around ₹350 billion. Key defence orders included electronic fuses, EW systems, communication systems for naval warships, fire control systems, Akash Prime weapon systems, radars, sonars, software-defined radios, night vision devices, tactical communication systems, and various projects in the non-defence sector.
Consequently, the order book increased to ₹760 billion, which includes an export order book of $407 million, up from $211 million in FY23.
The company achieved exports of $93 million, reflecting a 92% year-on-year increase. Key export products included transmit and receive (TR) modules, compact multi-purpose advanced stabilization systems (COMPASS), radar and EW systems, medical electronics, and communication equipment.
Also Read: Investing in Indian defence? Here are the top 5 PSU defence stocks
Key beneficiary of defence indigenization
BEL has a market share of 12% in the overall defence market and a market share of nearly 60% in the highly specialized defence electronics segment. Domestic brokerage firm Motilal Oswal expects BEL to remain a key beneficiary of defence indigenisation potential worth ₹5 trillion over the next five years with its presence across defence platforms and products ranging from radars, simulators, EW systems, electronic fuses, thermal imaging, integrated air command and control systems, border surveillance systems, counter-drone systems, etc.
Also Read: Multibagger! This defence stock zoomed over 400% in 3 years, more than 1200% in 4 years
The share of indigenisation in the Indian defence sector has been continuously moving up, and the brokerage expects BHE’s revenue market share to remain high at around 12–13%. It said that the company is continuously taking initiatives to increase the share of exports and non-defence revenue, which will reduce its dependence on only domestic defence.
Upgraded to ‘Buy’
Following the company’s Q4 and FY24 performance, Motilal Oswal raised its earnings estimates by 21% and 32% to account for the government’s ongoing support for the defence sector, the company’s increasing market share, better-than-expected gross margins, and improved working capital management.
Motilal Oswal anticipates a CAGR of 19% in sales, 20% in EBITDA, and 22% in PAT over FY24–26. It expects operating cash flow (OCF) and free cash flow (FCF) to remain strong during this period due to effective control over working capital. Additionally, it said the company had a cash surplus of ₹110 billion as of FY24, providing ample scope for further capacity expansion.
Also Read: Up 275% in a year, this defence stock’s growth is just getting started
The brokerage valued BEL stock at 35x P/E on two-year forward earnings and revised its target price to ₹310 per share, upgrading the rating from ‘Neutral’ to ‘Buy’.
Holds a lucrative ordering opportunity
Earlier, Japanese brokerage firm Nomura initiated coverage on Bharat Electronics Limited (BEL) with a ‘buy’ rating and set a target price of ₹300 per share.
Nomura highlighted that India’s defence sector presents a lucrative ordering opportunity of $138 billion over FY24–32 due to escalating demand for defence equipment, technologies, and services. This scenario offers significant prospects for companies involved in defence production and technology development.
Also Read: HAL, BEL shares gain over 2% as Nomura initiates coverage with a ‘Buy’ call
The brokerage emphasized that India’s defence capital expenditure is expected to rise to 37% of the total budget by FY30, up from the projected 29% in FY25. This increase translates to a cumulative capital outlay of ₹15.5 trillion over FY24–30, indicating substantial growth compared to previous periods.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 21 May 2024, 10:16 AM IST
