Bharat Electronics Limited - ZENMoney

Company Profile: Bharat Electronics Limited (BEL), a Public Sector Unit (PSU) with a "Navratna" status, was incorporated in the year 1954 by Government of India under the Ministry of Defence to meet the specialized electronic needs of the Indian defence services. BEL is the sole manufacturer of radar systems in India and has equal business presence in all the 3 defence sectors of Army, Navy and Air Force. BEL also manufactures defence products such as Military Communications, Night vision goggles, Akash Missiles, Naval Systems, Opto-Electronics, Tank Electronics and Electronic Warfare Systems & Simulators. The company's Non-defence products include: Products for Telecommunications sector, Solar Photovoltaic systems, Electronic Components, Electronic Voting machine etc. BEL presently has one operational subsidiary (BEL Optronic Devices Ltd.) and one Joint Venture Company namely, GE BE Pvt. Ltd. The company derives 85% of it's revenues from Defence Contracts.

Strengths:

BEL's order book as on 1st April, 2013 stood at Rs. 24,949 crore. The order book is around 4 times its FY2013 revenues and thus provides strong revenue visibility for the next two to three years.

Company is expecting an order-inflow of Rs. 6,000-8,000 crore in FY14 and the order inflow is expected to go up in the coming financial years because of an order pipeline of Rs. 18,000 cr in the near-term and a long-term order pipeline of Rs. 40,000-50,000 cr.

Concerns:

- Growing competition from private players entry into the sector.

- Emergence of Joint Venture companies of foreign Original Equipment Manufacturers (OEMs) with Indian private players.

- Company has high receivables and inventories on its books.

Outlook: BEL has the requisite infrastructure to reach revenues of Rs. 10,000 crore per annum but, delivery schedules and customer requirements limit revenue generation possibilities. Thus, a positive change in these variables along with a strong order book position provides the company with a possibility to record a healthy growth in it's top-line in the coming few years. These along with increasing export opportunities through off-set trades (BEL is working with many foreign Aerospace and Defence companies for these), because of high import requirements of Indian Defence forces, bodes well for the company. BEL is also planning to form a Joint Venture company with Thales, France for strengthening it's capabilities in the Radar Technology space (one of it's important revenue stream). All the above possibilities along with a strong balance sheet (zero debt and Rs. 5302.49 crores of cash & cash equivalents) augur well for the company for the coming few years.

Source : Equity Bulls

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