BEL is a smart gainer

about 4 months ago
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Bharat Electronics is among the top five gainers on the BSE today morning, going up over 8% to Rs.100.40. Its 52-week high is at Rs.124.20.

The Navratna Defence PSU is very much in demand today on the back of its very good earnings for Q1FY20, despite FY19 seeing higher Revenue due to non-recurring Electronic Voting Machine (EVM) & Voter Verifiable Paper Audit Trail (VVPAT).

In our Future Calls column, we have today given a buy with SL of Rs. 91.50 and target of Rs. 96 in 1 month and Rs. 99 in the next 3 months. It has surpassed all targets today itself.

For Q1FY20, company has posted Revenue of Rs. 2,125 cr against Rs. 2,132 cr, which although looks flat, the comparison is unwise, as last year same quarter i.e. Q1FY19, EVM/VVPAT related sales accounted for 20% of Revenue and total (22% of FY19 revenue). Adjusting for this, Revenue has infact grown by about 25% on YoY basis.

EBITDA has come in at Rs. 355 cr against Rs. 319 cr YoY, a growth of 11% YoY with healthy EBITDA margin of 16.7% over 14.9% YoY, an expansion of 180 bps.

PAT is placed at Rs. 206 cr against Rs. 180 cr YoY, growing by 14% YoY, with EPS of Rs. 0.86 against 0.77 YoY.

As at end of Jun-Q, company had order book of Rs. 51,715 crores, which is 4.3x of FY19 revenue. Order book is also well diversified with almost half of the backlog is from the Navy, 17% each from Army and the Air Force and balance largely for non-defense applications.

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