Research

First cut of Bharat Electronics - Q1FY23 result - Reliance Securities

Posted On : 2022-07-16 21:07:21( TIMEZONE : IST )

By Mr. Arafat Saiyed- Senior Research Analyst at Reliance Securities.

Bharat Electronics: 1QFY23 First Cut: Strong YoY growth on low base

Bharat Electronics (BEL) delivered a strong performance in 1QFY23 on a low base despite the challenging environment. Revenue increased by 91% YoY, (down 51% QoQ) to Rs31.4bn, above our estimates of Rs20.1bn.

EBITDA increased 646% YoY (down 67% QoQ) to Rs5.2bn (our estimate of Rs2bn), while EBITDA margin rose by 1,240bps YoY (down 825 bps QoQ) to 16.6% led by operating efficiencies on strong revenue growth.

PAT came in at Rs3.7bn, up 1401% YoY (down 68% QoQ) against our estimate of Rs1.2bn.

Order book at the end of 1QFY23 stands at Rss553bn (3.3x TTM revenue) and provides a healthy revenue visibility in the near term. The Order inflow for 1QFY23 declined by 67% to Rs9bn.

Our View: We maintain our positive stance on BEL's long-term prospects led by the robust defence spending, strong expertise and relationship with government entities and diversification into non-defence business. We expect the company to clock a double-digit growth over the next couple of years, aided by business opportunities in both defence and non-defence segments. BEL is among the few defence PSUs that historically delivered strong financials and has a track record of efficient capital allocation. The debt-free balance sheet, efficient working capital management, adequate R&D spend, technology adoption, track record of timely execution of large projects, strong cash flow and prudent capital allocation, augurs well for the company. We have BUY rating on the stock, with a Target Price of Rs270.

Shares of Bharat Electronics Limited was last trading in BSE at Rs. 245.45 as compared to the previous close of Rs. 237.35. The total number of shares traded during the day was 446514 in over 7948 trades.

The stock hit an intraday high of Rs. 246.60 and intraday low of 236.70. The net turnover during the day was Rs. 108021438.00.