Bharat Electronics Q3 Results Review - Decent Quarterly Performance: Prabhudas Lilladher

Prabhudas Lilladher Report

Bharat Electronics Ltd. reported decent quarterly performance with revenue growth of 11.8% YoY to Rs41.3bn and profit after tax growth of 2.6% YoY to ~Rs 6 billion. Ebitda margins declined 160 bps YoY to 20.7% in Q3 FY23, despite gross margins improvement of ~110 bps YoY to 41.5%.

Implied order inflows came in at Rs 13.7 billion (down ~76% YoY on high base) in Q3 FY23, while order book stands at Rs 501.2 billion (2.9 times trailing twelve months revenue).

Order pipeline remains healthy from defence (Akash Prime, HIMSHAKTI EWS etc.) as well as non-defence segment.

Earlier management had guided ~15% revenue growth with Ebitda margin of ~20-23% and order inflows of ~Rs 180-200 billion for FY23. We remain positive on long term growth story of Bharat Electronics given-

1. strong order backlog and order pipeline,

2. diversification in newer business verticals like, medical equipment’s, hydrogen fuel cell, electric vehicle batteries etc.,

3. focus on export markets and

4. government focus on product indigenisation etc.

We expect revenue and profit after tax compound annual growth rate of 16.6%/19.1% between FY22-FY25E.

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