Geojit recommends buying Bharat Electronics with a target price of Rs 112 in its research report dated March 31, 2023
Key Points:
- BEL is a Navaratna enterprise with a 37% market share in the Indian defense electronics market.
- The company specializes in radar and weapons systems, defense communication, and electronic warfare.
- BEL recorded a 25% YoY growth in revenue and a 36% YoY growth in PAT during 9MFY23, thanks to improved execution.
- The EBITDA margin for 9MFY23 increased by 50bps YoY to 20.0%, and absolute EBITDA grew by 28% YoY.
- The order backlog at the end of Q3FY23 was Rs.50,116cr (3.3x FY22 sales), providing strong earning visibility for the next three years.
- The recent addition of approximately Rs.16,000cr worth of orders towards the end of the year has brought the total order backlog to Rs.66,410cr (4.4x FY22 sales).
- The cumulative order intake for the year was Rs.19,800cr.
- Despite stable margin profiles at ~22%, the company has a positive long-term view considering its strong order book visibility, execution prowess, and a 16% CAGR growth in PAT over FY23E-25E.
Details of Bharat Electronics Share:
Bharat Electronics Ltd. (BEL), a Navaratna enterprise dominating 37% of the Indian defense electronics market, specializes in radar and weapons systems, defense communication, and electronic warfare. The company recorded a 25% YoY growth in revenue and a 36% YoY growth in PAT during 9MFY23, led by improved execution. The EBITDA margin for 9MFY23 also increased by 50bps YoY to 20.0%, and absolute EBITDA grew by 28% YoY. With an order backlog of Rs.50,116cr (3.3x FY22 sales) at the end of Q3FY23, the company provides strong earning visibility for the next three years. The recent addition of approximately Rs.16,000cr worth of orders towards the end of the year has brought the total order backlog to Rs.66,410cr (4.4x FY22 sales). The cumulative order intake for the year was Rs.19,800cr. Despite stable margin profiles at ~22%, we maintain a positive long-term view of the company, considering its strong order book visibility, execution prowess, and a 16% CAGR growth in PAT over FY23E-25E.
Outlook:
Based on recent order wins and projected earnings for FY25, we have upgraded our rating on BEL to Buy from Hold and set a target price of Rs. 112, with a P/E of 21x.
About Bharat Electronics Company Share:
Bharat Electronics Limited (BEL) is an Indian Government-owned aerospace and defence electronics company. It primarily manufactures advanced electronic products for ground and aerospace applications. BEL is one of nine PSUs under the Ministry of Defence of India.
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