Bharat Electronics Ltd: Geojit retains 'buy' call
- BEL has 37% market share in Indian defence electronics.
- Strong earning visibility for the next 3 years.
Company: Bharat Electronics Ltd
Recommendation: Buy
(12 months investment tenure)
Current Market Price: Rs.98; Target: Rs 112; Profit: 15%.
Financial Intermediary: Geojit Financial Services
Bharat Electronics Ltd. (BEL) is a Navaratna enterprise with 37% market share in Indian defence electronics. BEL’s core capabilities are in radar & weapons systems, defence communication, & electron-ic warfare.9MFY23 revenue grew by 25% YoY, PAT was up by 36% YoY, led by better execution.
9MFY23 EBITDA margin improved by 50bps YoY to 20.0%, and ab-solute EBITDA grew by 28% YoY.
The order backlog at the end of Q3FY23 was at Rs.50,116cr (3.3x FY22 sales), providing strong earning visibility for the next 3 years.
The order book is boosted by ~Rs.16,000cr worth of orders towards the end of the year, bringing the total order backlog to Rs.66,410cr (4.4x FY22 sales). The cumulative order intake for the year was Rs.19,800cr.
We maintain our positive view in the long term, considering strong order book visibility, execution prowess, and a stable margin profile ~22%. While PAT continues to grow at a 16% CAGR over FY23E-25E.
We value BEL at a P/E of 21x on FY25E, and given recent order wins, upgrade to Buy from Hold rating with a target price of Rs.112.
Declaration
The above article is based on a report by Geojit Financial Services. Investing in stock market is subject to risk of loss. Take the advice of your financial expert before making investments in this regard. Myfin Point and the author are not responsible for any profit or loss that may occur based on the decision taken after reading the article.