Bharat Electronics (BEL) reported revenues at Rs. 3189 crore, growth of 16.3% YoY, above our estimate of Rs. 2502 crore on the back of normalising supply chain, Ventilator order and business operations leading to execution pick-up. Absolute EBITDA for the quarter was at Rs. 623.4 crore (vs. our estimate of Rs. 329.4 crore) up 14.4% YoY. EBITDA margin was better than estimate at 19.6% (above our estimate of 13.2%) down marginally by ~30 bps YoY, owing to controlled operating expenses, better than expected execution. Hence, PAT came in at Rs. 397 crore, up 16.9% owing to better execution, higher other income, which grew 82% to Rs. 27 crore on a YoY basis.
Valuation & Outlook
Overall, BEL reported strong execution for Q2FY21 and is expected to maintain the momentum stable for H2FY21E while order inflows may get impacted in the medium term due to a delay or deferral in a few projects but overall expected to be decent in current environment. BEL is likely to continue its focus to increase contribution from non-defence segment to ~20%, albeit with lower margins in the next three to five years. Overall strong order book of Rs. 52148 crore continues to provide strong revenue visibility. We expect BEL to report revenue, EBITDA, PAT CAGR of 8.8%, 5.2%, 4.5%, respectively, in FY20-22E. We revise our target price to Rs. 110 (13.5x on FY22E EPS) and change our rating from HOLD to BUY. Any disappointment on execution front may significantly impact the operating performance of BEL.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_BharatElectronics_Q2FY21.pdf
Shares of BHARAT ELECTRONICS LTD. was last trading in BSE at Rs.96.65 as compared to the previous close of Rs. 96.65. The total number of shares traded during the day was 81620 in over 659 trades.
The stock hit an intraday high of Rs. 97.4 and intraday low of 96.35. The net turnover during the day was Rs. 7898001.