Buy Bharat Electronics; target of Rs 446: ICICI Securities

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Strong order book: BEL's order book stood at INR 687bn, with a guidance of INR 550bn+ for FY27, including QRSAM orders worth ~INR 300bn.
  • Sales execution: BEL's Q2FY27 revenue was at INR 73.3bn, beating estimates by ~10%, with management maintaining FY27 revenue guidance of 15%+ YoY.
  • Margin improvement: EBITDA margin was at 27.9%, recovering 290bps QoQ, with management guiding for 28%+ EBITDA margins for FY27.
  • New opportunities: BEL is bidding for the AMCA program and has submitted a bid in consortium with L&T, which could open a new chapter in BEL's history if materialized.

Thesis Validation Checklist

  • Order book growth: Monitor order book additions, particularly QRSAM and NGC orders, to assess BEL's revenue visibility.
  • Sales execution: Track BEL's quarterly revenue to ensure it meets the guided growth rate.
  • Margin expansion: Monitor EBITDA margin to ensure it meets the guided range of 28%+.
  • New business opportunities: Track the progress of BEL's bids for new programs, such as AMCA, to assess potential revenue growth.