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ICICI Securities Report
Bharat Electronics Ltd. has received AMC orders worth Rs 39.15 billion, taking its total order inflow for FY24 to Rs 183 billion thus far.
In our view, these are recurring annual orders and hence, may be executed within the next 12-15 months. Going ahead, we believe BEL is likely to receive orders worth Rs 68 billion pertaining to the fuses for the Indian Army and sub-systems for naval platforms, taking the total order inflow for FY24 to Rs 250 billion, compared to the management's guidance of Rs 200 billion.
As a result, we believe the management might revise up its earnings/order inflow guidance. Taking cognisance of strong order inflow and steady execution, we raise our valuation multiple to 28 times (earlier 27 times) and roll over to FY26E.
Our revised target price works out to Rs 190 (earlier Rs 155) on 28 times FY26E earnings per share. Maintain 'Buy'.
Key risks
Delay in the award of key orders such as quick reaction surface-to-air missile.
Delay in execution in current geopolitical scenario.
Erosion in margins.
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