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Bharat Electronics highlights key takeaways from Q2FY24 in Earnings Call

Oct 31, 2023

By: BlinkX Research Team

Bharat Electronics Limited (BEL), one of India's premier defense electronics companies, has shared key insights from its Q2FY24 earnings call, shedding light on its financial performance and strategic priorities. The company maintains its guidance while expressing optimism about securing defense order wins.

Guidance Remains Unchanged
BEL has reconfirmed its revenue growth guidance for the fiscal year, expecting growth in the range of 15-17%. The company foresees order inflows totaling INR 200 billion, with margins expected to fall within the range of 21-23%. The revenue composition is anticipated to maintain an 85% focus on defense, a shift from the 71:29 defense-to-non-defense split observed in the first half of the fiscal year. This shift was attributed to higher revenue contribution from Electronic Voting Machines (EVMs) due to election-year demand.

Strong Order Intake in 1HFY24
During the first half of FY24, BEL recorded a significant order intake, with approximately INR 150 billion worth of orders. A substantial portion of these orders was concentrated in the defense sector. Notable contracts included the Akash Weapon System (AWS) valued at INR 40 billion, INR 19.8 billion for Shakti EW & Sanket MK III (Naval Systems), and various equipment for New Generation Maritime Vessels (NGMV) from Cochin Shipyard, amounting to INR 21.2 billion. Additionally, BEL secured other contracts totaling INR 32.3 billion, encompassing both defense and non-defense segments.

Pending Fuse Order
BEL is anticipating an order worth approximately INR 45 billion related to fuses, following the successful conclusion of discussions with the Ministry of Defense (MOD). The company expects to receive the official orders in due course.

Capital Expenditure (Capex) Guidance
The company has set a capex guidance of INR 7-8 billion for FY24, with INR 2.5 billion already expensed. This allocation underscores BEL's commitment to enhancing its infrastructure and capabilities.

Focus on Exports
BEL remains committed to expanding its international footprint, with a strong emphasis on exports. The company aims to achieve a turnover of USD 90 million in FY24, a notable increase from the USD 46 million recorded in FY23. In the first half of FY24, BEL achieved a turnover of USD 27 million and currently maintains an order book worth USD 300 million, reflecting the growing demand for its products and services on the global stage.

Diversifying Non-Defense Segments
In the non-defense segment, BEL sees opportunities amounting to INR 8-9 billion, particularly in the deployment of Air Traffic Management Systems (ATMS) across 40 small airports. Other potential areas for expansion include participation in railway and metro projects, covering screen doors, simulators, Automatic Train Supervision (ATS), and Communication-Based Train Control (CBCT). However, BEL expects its execution mix to remain tilted toward the defense segment, reflecting the sustained growth and strategic importance of this sector.