Bharat Electronics Q1 Review - Strong Quarter; Large Pipeline Gives Healthy Visibility: Prabhudas Lilladher

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Prabhudas Lilladher Report

We revise our FY25/26E earnings per share estimates of Bharat Electronics Ltd. by +3.5%/+4.3% factoring in healthy execution and better profitability and upgrade the rating to ‘Accumulate' from Hold with a revised target price of Rs 341 (Rs 290 earlier). Bharat Electronics reported a strong performance in Q1 FY25 with 19.6% YoY revenue growth and Ebitda margin expansion of 338 basis points YoY to 22.3%.

~Rs 500 billion worth of order inflow is expected over the next two years (~Rs 250 billion each year) including programs such as ADFCR-ATULYA, Mi-17 EW suite, X-Band MFR for Next Generation Missile Vessels, Ground Based Mobile ELINT System, Long-Range Artillery, MRSAM and Multi-Function Surveillance and Threat Alert system for naval ships, etc. Quick Reaction Surface-to-Air Missile could add further Rs 250 billion plus to the order inflow in FY26.

Healthy opportunities also exist in Su-30 upgrades with Hindustan Aeronautics Ltd., Uttam radars for LCA Mk1A, NETRA AEW&CS, ALNS MK-II, and Kavach for Railways.

Easing up of Israel supply chain disruptions should aid execution, enabling the company to achieve its 15% revenue growth guidance in FY25.

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