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ICICI Securities Report
Bharat Electronics’ (BEL) Q4FY23 performance was ahead of street estimates on all counts. In FY23, management met its guidance for order inflow of Rs205bn, revenue growth of 15% and EBITDA margin of 21-23%. Key points: 1) EBITDA at Rs18.3bn (up 16% YoY) was 8% ahead of street estimates; 2) orderbook at Rs607bn implies bill-to-book ratio of 3.5x; 3) EBITDA margin rose to 28% in Q4FY23 (FY23: 23%); 4) receivable days were stable YoY at 148; cash & equivalents were at Rs3.9bn vs Rs1.3bn in FY22; and 5) cash dividend of Rs1.2/share thus far for FY23, besides, bonus share issue of 2:1 in Sep-22.
Going ahead, management has guided for order inflow of Rs200bn, revenue growth of 17% YoY and EBITDA margin of 21-23% (incl. other income) for FY24. We introduce FY25E numbers at this stage and expect 12.6% EPS (FY23-FY25E) CAGR. In our view, with its finger in the pie in almost all the upcoming orders over the next few years, BEL is the best play in the defence space. We roll-over the valuation to FY25E and maintain BUY rating on the stock with a revised TP of Rs140 (earlier Rs125) on an unchanged 25x FY25E EPS.
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