Target: ₹202

CMP:₹185.05

Bharat Electronics Ltd, a defence public sector undertaking, is engaged in the business of Defence Electronics, especially a dominant supplier of radar, communication and electronic warfare equipment to the Indian armed forces. Besides, the government ownership leads to a sizeable inflow of orders on a nominated basis, providing a steady earnings stream to the company.

The company’s unexecuted order book stood at ₹68,728 crore as of Sept 30, 2023, which grew 50 per cent y-o-y. The order book stands at 3.8 times of the operating income on TTM basis, which provides adequate revenue visibility over the medium term. Order inflow stood at ₹26,613 crore for FY24 so far vs. order inflows in FY23 of ₹20,690 crore.

The company’s strong order book has surpassed its FY24 order inflow guidance of ₹20,000 crore. Big-ticket orders for QRSAM, MRSAM and naval platforms due in FY25 could provide a multi-year revenue growth opportunity in the medium term.

We had issued stock update report on Sept 04, 2023 on BEL Ltd and recommended to buy the stock with the base target of ₹151. The stock has achieved its target. Given the healthy growth outlook and expectation of strong order intake, we have now revised earnings, introduced FY26 estimates and increased target price for the stock.