Bharat Electronics Q4 Results Review - Robust All-Round Performance: Motilal Oswal

Motilal Oswal Report

Bharat Electronics Ltd.'s Q4 FY24 results beat our estimates, driven by better-than-expected Ebitda margin and profit after tax and strong revenue growth.

Up-fronting of order inflows led to a beat in overall order inflows for the company. We expect Bharat Electronics to be a key beneficiary of increasing defense indigenisation. The share of indigenisation in the Indian defense sector has been continuously moving up and we expect Bharat Electronics’ revenue market share to remain high at around 12-13%.

The company is continuously taking initiatives to increase the share of exports and non-defense revenues. We incorporate higher margins and increase our estimates by 21%/32% for FY25/FY26.

We increase the valuation multiple to account for a larger market share of Bharat Electronics, benefits of technology tie-ups, MoUs, and an improving share of exports and non-defense in total revenues.

We value Bharat Electronics at 35 times price/earnings on two-year forward earnings and revise the target price to Rs 310. We upgrade the stock to Buy from Neutral earlier.

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