Bharat Electronics - Strong 4Q results cover up for 9M weakness; working capital corrects - Kotak

Recovery in 4Q (22% sales growth; 20% EBITDA margin) helped BEL recover ground lost in 9M (full-year sales up 6% yoy; margin flattish at 8.7%). Large margin beat in 4Q possibly indicates completion of low-margin Government nominated orders. Working capital has corrected sharply possibly on deployment of advances.

Retain REDUCE (TP: Rs1,370 versus Rs1,300 earlier) on (1) risks to execution (again misses turnover target despite strong backlog) and (2) cash chest supporting bottom (other income at 40% of PBT).

Source : Equity Bulls

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