Bharat Electronics strong June quarter paves way for FY24 targets
₹3,511 crore. This performance provides confidence that the state-owned aerospace and defence company is on track to meet its FY24 revenue growth guidance of 17%. Gross margin stood out as a particularly positive surprise in the June quarter, reaching 43.5%.
This was above the FY24 guided range of 40-42%, and marks a year-on-year expansion of 158 basis points (bps). The Ebitda (earnings before interest, tax, depreciation, and amortization) margin saw an even larger expansion of 243 bps, climbing to 18.9%, exceeding analysts’ forecasts. The Ebitda margin performance was largely the result of efficient execution and operating leverage.
Despite this promising first quarter, BEL has chosen to maintain its FY24 gross margin guidance, for now. Analysts at Kotak Institutional Equities in a July 28 report said that the, “Unchanged full-year guidance dilutes the impact of the Q1 beat." Furthermore, the FY24 Ebitda margin guidance of 21-23% has also been sustained. A significant part of the company’s strategy to reach its targets is based on the government’s indigenization measures.
BEL anticipates an order inflow exceeding ₹20,000 crore in FY24. The company is already well-positioned here, having achieved about 40% of this target in Q1, according to Kotak Institutional Equities. By the end of June, BEL’s order book stood at ₹65,356 crore, an increase of 8% since the end of March.
“We see BEL at a vantage position with big-ticket orders for QRSAM, MRSAM and naval platforms due in FY25 that would provide a multi-year revenue growth opportunity in the medium term," said analysts at ICICI Securities in a report on 29 July. QRSAM is quick reaction surface to air missile. MRSAM is medium range surface to air missile.
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