For BEL, consistent growth is a key ask now
₹4,970 crore, albeit on a high base. For FY25, the order inflow guidance stands at ₹25,000 crore. Some of the orders expected to come in FY25 include ADFCR Atulya, an electronic warfare suite for Mi-17 V-5 helicopters, a security and surveillance system for the Army and mountain radars, among others.
However, this target is 30% lower than FY24, due to absence of large-ticket orders. For now, a comforting factor is that BEL’s huge order backlog of ₹76,700 crore, which is about 3.7 times trailing 12 months revenue, aids revenue visibility. In FY26, order inflows are expected to be worth ₹50,000 crore, led by strong base orders, and quick reaction surface-to-air missile (QRSAM) order.
Further, there has been a spike of 144% in provisions for liquidated damages to ₹132 crore, 14% of Ebitda. This could impact future profitability if it remains at an elevated level. In the backdrop of BEL’s steep 70% rally in CY24 so far, these weak links suggest that investors should tread carefully.
True, there has been a significant thrust of the Indian government on defence, which is likely to continue and BEL would be a potential beneficiary. That said, a meaningful upside from the current levels would require consistent earnings growth, which may be challenging. “We await large ticket-size orders, better execution rate/margin visibility over the next few quarters for the stock to re-rate hereon," said a Nuvama Research report dated 29 July.
The research firm believes that BEL has more positive catalysts/triggers than negative ones, and has further scope for a re-rating from current levels subject to aforementioned ask rates. Meanwhile, BEL has planned an annual capex of around ₹800 crore for FY25. This will be utilized for projects
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