BEL stock soars: During Tuesday’s intraday trading on the BSE, shares of Bharat Electronics Limited (BEL) surged 9%, setting a new high of Rs 282.
The solid Q4 performance preceded the spike. BEL’s profit after tax (PAT) for the March quarter (Q4FY24) increased by 30.6% YoY to Rs 1,783 crore.
For the sixth consecutive trading day, the state-owned defence company’s stock has increased in quote and has increased by 26% throughout that time. Today marks the first time that BEL’s market capitalization has crossed Rs 2 trillion, thanks to a strong increase in stock prices.
With a market capitalization of Rs 2.06 trillion, BEL was up 8.9% at Rs 281.85 at 09:24 AM. By contrast, the S&P BSE Sensex fell by 0.1% to close at 73,929.
BEL’s revenue climbed to Rs 8,564 crore in Q4FY24, up 32.6% year over year and 106% quarter over quarter. EBITDA margin, however, increased 94 bps Q-o-Q and decreased 156 bps Y-o-Y to 26.7%. With over 33% year-over-year revenue increase in Q4FY24, execution has significantly improved from 5% Y-o-Y in 9MFY24.
Leading provider of defence and aerospace electronics is BEL. It produces cutting-edge electrical goods principally. a wide range of products spanning multiple technologies and product categories, such as electro-optics, homeland security, electronic warfare & avionics, radar, missile systems, and civilian goods.
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Overall, FY24 operational performance exceeded expectations due to an EBITDA margin that was higher than anticipated, at 24.9% (compared to guidance of roughly 23%). In contrast, the company’s sales increase in FY24—which was tentative as of this writing—was roughly 4% year over year.
Compared to yearly inflows of Rs 19,000–20,000 crore in FY22 & FY23, order inflows have been robust, totaling Rs 35,512 crore in FY24. With an order backlog of Rs 75,934 crore (3.7 times FY24 revenue), there is good vision for revenue growth. The order pipeline is still robust in the non-defense, export, and defence sectors (electronic warfare, radars, communication, navigation systems, etc. for several platforms).
According to ICICI Securities, BEL is well-positioned to take advantage of the enormous opportunity in the Indian defence and space electronics systems/sub-systems or components industry, which is predicted to grow at a compound annual growth rate (CAGR) of 13–14% over the course of FY22–27. By FY27, the share of defence electronics in total defence production will rise to 40–42 percent, up from its current share of 36–37 percent.
Given its significant technical competence and skills in designing, developing, and producing a wide range of strategic electronic products/systems, BEL is anticipated to be the main beneficiary of this upcoming opportunity in the indigenization of defence platforms, according to the brokerage business. Also Read GIFT Nifty Down 40 points; the Trading Setting for the Current Session is seen here.
Healthy order-backlog with robust pipeline provides strong earnings visibility. Moreover, company’s strategy to diversify into non-defence, focus on increasing exports & services share would aid long term growth and help de-risk its business, it added.
On the other hand, Motilal Oswal Financial Services (MOFSL) expects BEL to be a key beneficiary of increasing defense indigenization. The share of indigenization in the Indian defense sector has been continuously moving up and the brokerage firm expects BEL’s revenue market share to remain high at around 12-13 per cent.
The company is continuously taking initiatives to increase the share of exports and non-defense revenues. The brokerage firm increase the valuation multiple to account for a larger market share of BEL, benefits of technology tie-ups, memorandum of understandings (MoUs), and an improving share of exports and non-defense in total revenues.
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