BHARAT ELECTRONICS LTD (NSE: BEL) Q2 2025 Earnings Call dated Oct. 28, 2024
Corporate Participants:
Manoj Jain — Chairman & Managing Director
Damodar Bhattad — Director (Finance) and Chief Financial Officer
Analysts:
Umesh Raut — Analyst
Ankur Sharma — Analyst
Priyesh — Analyst
Mohit Pandey — Analyst
Nitin Arora — Analyst
Mayank Chaturvedi — Analyst
Harshit Patel — Analyst
Amit Dixit — Analyst
Ishan Shrimali — Analyst
Lavina Quadros — Analyst
Amit Mahawar — Analyst
Harshit Jitendra Kapadia — Analyst
Deepak Krishnan — Analyst
Gagan Thareja — Analyst
Rupesh Tatiya — Analyst
Aaditya Jaiswal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Bharat Electronics Limited Q2 FY25 Earnings Conference Call, hosted by Nomura Financial Advisory and Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Umesh Raut from Nomura. Thank you, and over to you sir.
Umesh Raut — Analyst
Thanks, Steve. Good afternoon, everyone. On the behalf of Nomura, we welcome you all for the Q2 FY25 Conference Call of Bharat Electronics Limited.
I take this opportunity to welcome the management of Bharat Electronics represented by Shri. Manoj Jain, Chairman and Managing Director; Shri. Damodar Bhattad, Director (Finance) and CFO; Shri. Sreenivas, Company Secretary.
I’ll now hand over the call to the company management for their opening remarks. Thank you.
Manoj Jain — Chairman & Managing Director
Yes, Good morning — good afternoon, everybody. Myself Manoj Jain, CMD, BEL.
I will just touch upon financial highlights up to Q2 financial year ’24-’25. So in this Q2, we have achieved the turnover to INR8,530 crore as compared to INR7,365 crore up to Q2 of last year, with a growth of 15.83%. And profit before tax has also increased to INR2,488 crore as compared to INR1,777 crore, which was there up to last year Q2 with a growth of 40.05%. The profit after tax also has increased to INR1,867 crore as compared to INR1,343 crore in the last Q2 ’23-’24 with a growth of 39.03%. The EBITDA also has increased to 27.26% up to Q2 of ’24-’25 as compared to 22.66% last year. The earning per share has also increased to INR2.55 as compared to INR1.84 in the last year at the same time at Q2. The order book position as on 1st of October 2024 is INR74,595 crore. So overall on all the financial parameters, we have achieved a good growth in — up to Q2.
This is a brief opening remark from my side.
Damodar Bhattad — Director (Finance) and Chief Financial Officer
So we’ll leave it to you for taking up the question-and-session session, Mr. Umesh. You can go ahead.
Questions and Answers:
Operator
Thank you very much, sir. [Operator Instructions] First question is from the line of Ankur Sharma from HDFC Life. Please go ahead.
Ankur Sharma
Yes. Good afternoon, sir. Thanks so much for your time. Just two questions. One was on the order inflows. Now what we see for the first half, we’ve done about INR7 odd — INR7,500-odd crores of inflows. Our guidance, I think, is INR25,000 thousand crores. Sir if you could just help us which are the larger orders that you expect in the second half which would kind of help you get to that target? Or are you seeing any slippages or otherwise? So just some sense on the order inflows.
And my second question will be on the working capital. So while profitability and topline growth has been very strong in the first half, operating cash flows are actually negative INR2,300-odd crores with this very — substantial rise in both debtors and inventory. So if you could just help us, what is driving that? And do we expect that to kind of normalize by the end of the year? Yeah, thanks.
Manoj Jain
So, good afternoon. As we have told that we have achieved an order inflow of INR7,500 crore in the first half of ’24-’25, we are confident of achieving the target guidance given of INR25,000 crore for ’24-’25. In that, the major orders which are expected are: one is for Ashwini Radar of around INR2,500 crores; electronic warfare suite for MI-17, that is INR2,000 crores; ATULYA order is another INR2,000 crores; Shakti Phase 4 is another INR2,000 crores. So these are the major orders expected. Already we have achieved INR7,500 crores. And with these orders and some other small orders, we hope to be — we are confident of achieving the given guidance of INR25,000 crores.
Ankur Sharma
Okay.
Manoj Jain
As regards to the working capital, the ratio is — current ratio as on 30th September is 1.6. And working capital is fairly reasonably okay. It has been around 1.5, 1.6 for the past few years. So we don’t see any — much challenges in the working capital management.
Ankur Sharma
Okay. Because my question was because our operating cash flow was negative despite this, but you’re saying will be broad [Phonetic]. Yes.
Manoj Jain
Operating cashflow is negative because in the first half, the inventory is more taken up because in the — for the second half, our turnover — further we have to achieve around INR14,500 crores as per the target. If you see our inventory, inventory is around INR9,000 crores. So first half we have achieved INR8,500 crores. Given a guidance of 15% growth, we have hope to achieve INR23,000 crore turnover, which means we have to achieve INR14,500 crore turnover in the second half, for which, we have to build up inventories, for which cash outflow will be there. So that’s why the operating cash flow is negative and inventory slightly build up for the second half. So that will recover. This will not be an issue.
Ankur Sharma
I get that. Okay, sir, great. Very helpful. Thank you.
Manoj Jain
Thank you.
Operator
Thank you. The next question is from the line of Priyesh from Mahindra Mutual Funds. Please go ahead.
Priyesh
Good afternoon, sir. Thank you so much for the opportunity. Sir, two questions. First, if you could provide a breakup of execution for this quarter in terms of project or program wise.
Manoj Jain
Appreciations what we have received in September or execution?
Priyesh
Yes. Execution for this second quarter.
Manoj Jain
Execution in the first half we can tell you. Major was of course LRSAM. LRSAM order which we have executed in the first half. There are five, six more main major projects. One is called CBIC project we commit for Delhi government — for Central Board of Indirect Taxes, that is around INR300 crore we executed. IACCS, so many activities we are continuously doing. And this first half, we have almost some INR300 crore worth of orders we executed for that project. Then EW System of Shakti around INR250 crore, Hammer missile systems, INR235 crore, then the Manpack Ku-Band terminals around INR200 crore. So these are the major projects — order which we executed in — till September 2024.
Priyesh
What would be the quantum of LRSAM, sir?
Manoj Jain
LRSAM, INR1,600 crore roughly. INR1,622 crore roughly.
Priyesh
Okay. Okay. Just wanted to understand the underlying reason that for the gross margin expansion that we have seen in second quarter of FY25, if you can provide the reason for the same? And also would that be fair assumption that this could be a sustainable gross margin for FY25?
Manoj Jain
See, we have given a gross margin guidance of 42% for the current year ’24-’25. The current half, the gross margin achieved is 45%. So it is the composition of product mix during the first half which has given us this margin of 45%. Overall, during the current year, we expect to have the gross margin of 42% only as we have given the guidance.
Priyesh
Okay, sir. Thank you. Thank you so much. That’s all from my side.
Operator
Thank you. The next question is from the line of Mohit Pandey from Macquarie Capital. Please go ahead.
Mohit Pandey
Yes. Good afternoon, sir, and thanks for the opportunity. Sir, firstly, if you could highlight which are the major projects to be executed in the next two quarters, that would be very helpful.
Manoj Jain
Yes. In the next two quarters, the main project, again, is LRSAM. So that is around INR1600-plus crore we will execute orders for that. Then one — another EW project is called HimShakti. That also will — around INR800 crore to INR900 crore worth of orders we will execute in next half. One more EW project is Instrumented EW Range, that also is one more major project executed by our Hyderabad unit, around INR750 crore is there for that. Akash Army, we have already started a good progress on that and we will liquidate around INR500 crore worth of items we’ll deliver by March for Akash Army. D-29 EW System is our now — continuously we are supplying. So in the next two halves — next two quarters, we will have around almost INR500 crore would be worth of equipment we will supply for this D-29 EW System. And then Weapon Locating Radar for plane, we will supply around INR450 crores. So these are the major items which we are going to supply in the next two quarters.
Mohit Pandey
Okay, sir. And sir, secondly on the supply chains if you could give an update on Israel-linked supply chains? Are you facing any challenges on that front?
Manoj Jain
Yes and no. Actually, major challenges which we had seen earlier for LRSAM and other, those big ticket items already streamlined. So we are not facing any challenge. Some other small items which are not affecting our turnover that much but it goes as a subsystem in larger system of other DPSEs, there we are finding some challenges. So it may affect their turnover that much, but our turnover point of view not — impact is analyzed for items which are coming from Israel. All the items streamlining has been done in last three to six months. So we are not facing any challenge as well.
Mohit Pandey
Sure, sir. Just — and lastly on margins, if you could highlight what are the two, three factors which lead to variation in margins across different product, that would be very helpful, sir.
Damodar Bhattad
No, it is just the product mix of different products. See there are 29 strategic business units which we have got. And all are executing different, different product lines. So it is all that the combination factor has given us an advantage in this current half. That is the only one. Individually, I cannot tell which product has given what, that we are not able to comment on.
Mohit Pandey
Okay, sir. Thank you, and wish you all the best.
Manoj Jain
Thank you.
Operator
The next question is from the line of Nitin Arora from Axis Mutual Fund. Please go ahead.
Nitin Arora
Hi, sir. Thank you for taking my question. Sir, just on the order intake guidance which you said, you feel still very confident of doing INR25,000 crores and you articulated few projects. Can you throw some light especially on this Ashwini Radar and all. It’s been now four, five quarters we’ve been hearing that this is something coming. I just want to understand it is some structural issue has come into it or is just that the final price negotiation is somewhat delaying it? Also on the other projects where the confidence is so high that we will do INR25,000 crores, are these more of in the final negotiation of pricing, where they are stuck? Just wanted first thing on that.
Manoj Jain
Okay. And then definitely once we have told you that our target was INR25,000 crore of order inflow this year, definitely we have done homework and we are confident, then only we announce that.
Nitin Arora
Right.
Manoj Jain
It was there. Ashwini Radar, we have told. This radar, already we have become L1, already declared L1 also. So it might become a multi-vendor. Actually, we were trying this to become a single vendor. But because of previous commitment given by DRDO, that it will be single bid for BEL. But anyway, over a period of time, they told let it go to multi-vendor situation. And we were confident that we will become L1. Because our associates, our development, our knowledge, our strength, based on that we can give to our users of most cost optimum solution. And then we were L1 already declared. So now declared L1, it may take another three months maximum to convert that L1 to getting the order. It will not be an issue. Already I think the three vendors participated in this and we were L1 in that. So this is about to come anytime now.
Okay. So previous delay was because of that confusion only whether they will go multi-vendor or single vendor or partial quantity single vendor to BEL. Because BEL was associated from day one in the PREDAR [Phonetic] development program jointly with the DRDO. So we were fighting for that. And because there wee previous commitment also. Anyway, part of life that we have to have multi-vendor situation and multi-vendor also there is no threat for BEL. So in this particular case, we have proved that we are cost competitive also. And we are getting order very soon now, because all other process are done by the user.
Regarding other three projects also, they are in a very, very advanced state. We are having multiple discussions going on. Even some of them, have already started a PLC also, first round of PLC, et cetera, started for that. So we are confident in next three months, maximum four months, we will have this order. And as soon as order comes, we will firstly intimate to SEBI and then to you immediately.
Nitin Arora
Okay. Sir, the second question was given — and sorry for again asking you this, I always ask this. But is that INR25,000 crore kind of an order intake, you’ve been consistently maintaining the momentum in the last two, three years. But given next year, how you are looking at it? I mean to grow at INR25,000 crores, you think you can grow on that number still? Do we have those programs, for example, MRSAM is still there. But generally in your sense, in a very practical way, you think growing on INR25,000 crores is still possible because? Otherwise then your growth — basically your profit growth will start looking quite weak. So just more of a question on a forward basis that how are you looking beyond INR25,000 crores if you look at your pipeline and government agency of ordering new orders?
Manoj Jain
Everything is promising for us right now. Let me again assure you. So we are targeting — next year it will be more than this year growth guidance what we have given you. Next year, April, we will again consolidate all of that. I can only assure you today it will be more than what is there for this year. This year we have grown revenue growth of 15%. Next year I can assure you now it’s a little bit more because of the so many leads and so many discussions we are already having on so many programs including we have told QRSAM, including MRSAM follow-on order. So these all orders are going to fructify mostly next year.
So next year order book position, if you say, on the QRSAM alone itself may give us INR25,000 crore to INR30,000 crore order book, one line item itself. Then remaining line items will give us something more. So we are confident next year will be definitely much more than what target we had set ourselves for this year. It will be much more, I can assure you. But that we will tell you from data on 1st April definitely will come up — come to you with much more a better figure for next year. But we are fully confident on that.
Nitin Arora
And sir, in terms of margin, you stated you generally being — saying that gross margin I will maintain it for about 42%. But given you have done such strong margin, I understand mix always is important, which you better understand than us. But generally, in your sense, do you think there is a high chance of you doing better margin just because of the mix part, nothing else? I mean operational leverage would be there. But I’m saying just because of the mix where it is getting concluded because you stated one number of — one project, which is like INR1,600 crores over the next one or two quarters. So that could be coming because of that order mix is somewhat do you think margins can hold up further?
Damodar Bhattad
You are only asking in no different version of the same question, right? [Technical Issues] you say we’ve maintained the gross margin of 42% for the current year.
Manoj Jain
We will definitely maintain that. We are in the process of doing further and further indigenization of our module, subsystems, et cetera. So hoping that if the indigenization is done well in time, definitely it will be — profit margin will increase. But today we can’t quantify about the future. Today we are confident about whatever margins which we have given to you, we are definitely going to cross that. We will achieve this, no doubt in that.
Nitin Arora
Thank you so much sir, for all the time, for always answering the questions. Thank you so much and all the best.
Manoj Jain
Yes. Thank you.
Operator
Thank you. The next question is from the line of Mayank Chaturvedi from HSBC Mutual Fund. Please go ahead.
Mayank Chaturvedi
Yes. Hi. Good afternoon, sir. Thank you for the opportunity. Sir, you highlighted that you now are working across 29 SBUs. I think a year or so back it was around 24 SBUs. Can you just highlight which SBUs you have added over the past one year? And what do you think is the total addressable market for these SBUs?
Manoj Jain
So 1st of January, we had opened five more SBUs, and that — one of them was EW Land Systems at our Hyderabad. So that was the biggest SBU, because for that we were doing so much of homework. So they have now started generating. This year, I think, they will cross around INR1,500 crore plus turnover this year itself. Because last year they were working jointly with another Naval System SBU of EW. So they already were doing good work. We had to only streamline them and separate them and become a separate SBU. So that SBU, already in the first year of existence so called itself will cross INR1,500 crore.
Other four SBUs are created at Bangalore for us. That also started as a micro SBU type of concept within BEL and some homework they have already done. One of them is, Seekers SBU, RF and IR seeker. Another one is Arms and Ammunition SBU. One of them is Network and Cybersecurity SBU. And one of them is Unmanned Systems SBU. So these four SBUs also have good growth prospectus, et cetea. We have reviewed that. RF Seeker SBU, this year may touch around INR350 crores to INR400 crore turnover, and other SBUs also will be of this similar line. So first year, for these four SBUs, we have given a target — internal target of around INR200 crores, INR250 crores to INR300 crores. And barring this fifth SBU, which definitely cross INR1,500 crores. And then slowly they will pick up. Finally, we want all the five SBUs to become INR1,000 crore SBU because they have those type of potential. In next two to three years, they will start contributing INR1,000-plus crore, that we have already our own plan for these SBUs.
Nitin Arora
Okay. And so on this Cybersecurity SBU, sir, I think it was largely being — the services were largely being consumed internally. Have you started offering these services to third-party now, now that you’re targeting a INR200 crore, INR300 crore revenue from…
Manoj Jain
Certainly, certainly, certainly, because earlier they were — their services were used for our bigger programs of our BEL itself, which we were supplying directly to Defense but there were no direct orders for them. So now anyway they will keep on supporting that internal uses. And we have our own internal booking standard for that. If they give services to our internal SBU also we account for that. But definitely, now we are looking at direct turnover for them, direct sales we call it. So that — there are four, five big leads already which we have converted into a business case for them. We are expecting one or two big orders in next 10, 15 days or maximum one month time. One from Ministry of Defense, one is from Medical AIMS and other departments, and some other are from FOC-related activities for some DPSUs.
So some four or five big leads are there which they are going to get and then execute also, some INR10 crore, INR15 crore type of orders they have already got and they are started executing that. But this big ticket items, we are expecting now and that’s why we are confident by March direct sales they may cross INR200 crore to INR250 crore. But definitely, they are supporting other SBUs and generating indirectly revenue for them for around INR200 crore work. Services they started giving to other SBUs.
Damodar Bhattad
Seeing the potential only, we formed separate strategic business units. There is a great potential in this areas. There will be a slow beginning. And as the time goes, they will slowly take off.
Mayank Chaturvedi
Okay, sir. Great. Great. Thank you for answering my questions. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Harshit Patel from Equirus Securities. Please go ahead.
Harshit Patel
Thank you very much for the opportunity, sir. Sir, my first question is India’s Naval pipeline is quite comprehensive in terms of additions of next-generation destroyers, frigates as well as there has been a substantial movement on the submarine programs as well recently. So could you highlight how we are going to increase our wallet share in these platforms, vis-a-vis how we were doing in the past? So basically what are our newly indigenized products and systems that we can now offer in these platforms which we were not doing earlier?
Manoj Jain
Definitely one is number. When number increases, turnover increases. And one is extra share in this platform. So extra indigenization or extra product to be added in these platforms. So we are working on both fronts. Adding numbers, upgrading previous products because some of the products which we have supplied, now we are giving slightly upgraded features. So that is not called as a new addition, but upgradation also has a huge turnover advantage for us because upgradation comes at some cost. So there are incremental product upgradation, subsystems upgradation. And third is adding some new portfolio of electronic variety subsystems.
So we are working on all the three. New variety work — share also we have now discussed especially on submarine programs, et cetera. And that itself will give us very good return or very good turnover for us. So all the three fronts, we are working on mid-level platforms. So many new type of radars which were earlier imported and now we are indigenized and we are giving like this MFR app radar order which we received in the last quarter, that is one such example which was older ships, it was a foreign source radar and now we have indigenized and that’s why now it is directly supplied by BEL. Earlier it was directly by Global RADAR. So that way, we are increasing some other gun interfaces and other things we have added. Some other integrated Sonar suit type of thing we are adding for submarine programs.
So we are keep on increasing the indigenization content in these programs and keep on upgrading various products which we had supplied earlier like EW or communication suits, et cetera, we are upgrading. So all the fronts, we are finding in our level pipeline projects itself are growing, and our share, our electronic share is further increasing because of indigenization efforts which we have put at right time. So because of that, Naval segment is the most promising out of the three Army, Navy, and Air Force for us as of now. But definitely other two also, Navy and Air Force — Army and Air Force also are catching up now because there also we have done lot many indigenization programs and so many big programs. But definitely Naval has taken the lead as of now for us.
Harshit Patel
Understood, sir. Sir, my second question is, could you comment on our content in the artillery systems being developed by the private players? So there are many programs happening simultaneously. ATAGS, Towed Gun Systems, Vajra, Mounted Gun Systems as well as light tanks. So what is the total addressable opportunity for us in these programs? I am asking because a lot of OEMs which are developing these programs, they also have their own electronics division. So would we be competing with their own divisions? How our market share, wallet share will pan out in those systems?
Manoj Jain
Okay. Like — all platforms — firstly for us, each and every platform is important whether it is a Naval platform or whether is a tanks and gun type of platform because everywhere there is a presence of electronics and there is a presence of BEL. So in these programs, although many of the programs are now — this type of platforms are opened up to private, but basic electronics for that based on our experience, based on our product, and based on our compatibility with the previously supplied system or based on our expertise of integrating them to a larger c4i systems, because of all these things, we are confident that they are coming to us, all these type of interfaces, like they call it — TIU is one such example. The communication interface unit for all these tanks and guns is provided by us. Typically all type of EO system are provided by us. So those are — and radios, radio communication with them that is provided by us.
And because when they approach us, they know we will give them a quality product and which is interfaceable to present solution and future solution. Because largely all complex, system-oriented solutions, the tech T3i program are handled by BEL. So that gives us an extra advantage. And that’s why even these private companies also want to work with us very very closely.
So we are not forcing any problem. We are working very, very closely with Bharat Forge or Tata or L&T and all these big players, private players also to see that we give them right products and technologies required for them in these programs.
Operator
Thank you. The next question is from the line of Amit Dixit from ICICI Securities. Please go ahead.
Amit Dixit
Yes, hi. Good afternoon, everyone. And congratulations on a good set of numbers. The first question is on the EBITDA margin, which seems to be very high in this quarter. Now I just wanted to understand whether it is due to the nature of contract — nature of orders that were executed or whether certainly provisions have been rolled back. So just wanted to get a little bit more clarity on that.
Manoj Jain
It is on the nature of orders executed.
Amit Dixit
So there are no provisions that have been rolled back?
Manoj Jain
No. Provisions withdrawn are minimal only. It’s more on the nature of contracts, that’s why the gross margin is 45%. That is why the EBITDA margin has gone up to 27%.
Amit Dixit
Okay. Fair enough. The second one is if you can just throw some more light on QRSAM and specifically where we are when we expect the ordering. I mean, what is the — where are we stuck? What is the major — are there some test pending or something? And also whether we are also participating in this Virupaksha?
Manoj Jain
Virupaksha. Which one — Virupaksha can you explain a little bit more?
Amit Dixit
That’s for Sukhoi-30.
Manoj Jain
[Foreign Speech] that one. Sukhoi-30 radar. Okay, okay. That is a radar program of Su-30. Because Su-30 has so many upgrade program and that two or three programs we are taking lead also. We are having constant discussion with our defense users IAF for that. So we are anyway engaging with them for EW right now. And for this radar program, we and HAL both are participating and we will see how — but it will take some more time to find like the configuration, optimum configuration, et cetera for this because right now we have just — they have just frozen, the DRDO has just frozen the LCA configuration. So from that to Su-30 configuration, there are a lot of technical challenges, et cetera. We are just watching that and technically associated with them for that.
So regarding QRSAM, last time also we told quite a good advancements are happened now in last three months also. We are moving in right direction. Some clarification, configuration changes, et cetera, some MRLS, those type of nitty-gritty of the contract or scope of work only finalized. And once everything is totally frozen, it will go to ministry for competent authority approval. Hopefully next year first quarter, we are expecting RFP maybe issued to us.
Amit Dixit
Okay. Got it, sir. Thank you so much.
Operator
Thank you. The next question is from the line of Ishan Shrimali from Tara Capital Partners. Please go ahead.
Ishan Shrimali
Am I audible sir?
Manoj Jain
Yes.
Ishan Shrimali
Yes. I have a couple of questions. The first would be, what would be the EBITDA margin like outlook or guidance for FY25? And the second thing is, in the last con call, you had asked — you had said that CapEx for ’24-’25 is budgeted around INR800 crores with some facilities in Hyderabad and Andhra and Nagpur. So could you elaborate on the anticipated production capabilities of these facilities and how they align with the future order pipeline?
Manoj Jain
EBITDA margin, as we have told we maintain a 23% to 25% what guidance we have already given for the current financing year.
Ishan Shrimali
Okay. For the current finance year.
Manoj Jain
For the current finance year. As far as the CapEx is concerned, we are in the range of around INR800 crores is what we are targeting in the current year. And what growth projections we are giving to you is all based on the different capabilities which are also coming.
Ishan Shrimali
Okay, I think the line is disconnected sir. Hello, can you hear me? Hello? Hello?
Operator
Just a second please wait while we connect the line.
Ishan Shrimali
Yes.
Operator
Ladies and gentlemen, the management line has been reconnected with us. Thank you for patiently holding. Yes sir, please go ahead.
Damodar Bhattad
You are asking about the CapEx?
Ishan Shrimali
No, I first asked about the EBITDA margin guidance for the…
Manoj Jain
EBITDA margin, we maintain the guidance of 23% to 25% what we have given for the finance year ’24-’25 okay?
Ishan Shrimali
Yes.
Manoj Jain
And as far as CapEx is concerned, yes we are expecting a total CapEx of INR800 crores in the current financial year. This CapEx what we are telling, these additional factories what are coming up, it will take maybe next year, next to next year to fructify become operational. It may be next year and some may be next to next year also. So these are work in progress in some of the cases. So whatever growth we are forecasting for the current year and next — especially in the next year is based on the additional capabilities also which we are building up because as the base goes up the percentage also goes up and the growth overall will be more. For this only the additional factories, additional CapEx is being done.
Ishan Shrimali
Yes. That’s it from my side. Thank you so much.
Manoj Jain
Thank you.
Operator
Thank you. The next question is from the line of Lavina from Jefferies. Please go ahead.
Lavina Quadros
Sir, congrats on a great set of numbers. I just wanted to check, non-defense side, any update you’d like to give, since the defense side is very clear?
Manoj Jain
Non-defence. Non-defense side, yes, we are having a order book position — I don’t know exact order book, but around 10% of our order book is typically non-defense. Right now we have around INR8,475 crore as our non-defense order book. We are getting very good leads now for like we got last year CDIC [Phonetic] and UP 112 as a project. This year also we are finding a lot of interest in that — our D4 system for BSF. We are going to get order very soon. We are declared already L1 for that also and one more security-related cabinet — what is that — one more security-related project we have recently got order. So we are getting every month around INR500 crore to — INR500-plus crore worth of orders in the non-defense segment also. So we will have a logical mix of around 85%, 15% which we typically want to maintain between defense and non-defense. So we are in that range only right now also and plans are there separately because we review our non-defense market leads, execution, et cetera, separately. And we found that there are no problems for maintaining this ratio of 85%, 15%.
Lavina Quadros
Sir and lastly — thank you for that. And lastly sir, I know a couple of people have asked as well. But just want to understand there is a concern that defense in general might be slowing down. There could be some derailment in future orders. I know at this point in time, the outlook looks very healthy. But do you see any challenge you foresee over 12 months or two years or three years that could derail the story, in general, from a very macro perspective?
Manoj Jain
In defense or non-defense?
Lavina Quadros
In defense, in defense.
Manoj Jain
Defense, so for next five years, we are dubbling with the leads and order books and other things. We are not having any issue for next five years. When we all sat together internally and then seeing what are the main, main loops which we are having — or main, main acquisition plans of our defense forces, Army, Navy, Air Force, we are confident minimum 15% growth guaranteed for us in next five years. We have made already for next five years our internal plan, which at appropriate point of time we may share with you also. But definitely, for next five years our visibility is very good for maintaining minimum 15% growth. We wanted to target for 17.5%. But right now, minimum 15% guarantee visibility is ensured for next five years for defense electronics for us.
Damodar Bhattad
And as far as the macroeconomic what you are telling macro budget is concerned, as you could see from the budget which is presented every year, the defence budget is always on an increasing trend only in general. Maybe sometimes increases could be a little bit here and there, but overall it is on an increasing trend only, even the country’s defense budget also.
Lavina Quadros
Understood, sir. Thanks a lot. All the best.
Manoj Jain
Yes.
Operator
Thank you. The next question is from the line of Amit Mahawar from UBS. Please go ahead.
Amit Mahawar
Yes. Sir, I have two quick questions. First is so broadly in FY25, assuming INR250 billion, INR260 billion worth of orders, the advance that we’ll have is around INR2,500 crores plus minus or there is no change, sir?
Manoj Jain
What was your question? INR25,000 crores of orders and…
Amit Mahawar
I’m saying the advance that we get on orders. I was just trying to understand if anything has changed on the contract side from the…
Manoj Jain
No, in general, the contractual terms, more or less remains the same. It is, of course, depending on contract by contract, but more or less they are on the same pattern.
Amit Mahawar
Same. Okay, fair. And second question is more medium-term, while you shared about status on QRSAM and some large orders. Across ’25 — because QRSAM is a very long project and it comes in stages. So apart from QRSAM, MRSAM, Akash, et cetera, just want to understand how should we year-wise look at the large order configuration for BEL in ’25, ’26 and ’27? The reason I ask this question is, if you’re growing your turnover by 15% in ’25 and ’26, your revenue billing is going to be more than INR500 billion. So I just want to understand if ’26 is going to be a very, very high intake year for you. Thank you.
Manoj Jain
See, there is always — we are always talking of larger programs like QRSAM and some other programs. But there’s always a base order, which always is there, which is INR15,000 crores to INR20,000 crores, which constitutes the — what — for whatever supplies we have already made, there is — there are upgrades, there are spare supplies, there are maintenance which are being done, so that base order is always there.
What we talk always of is the incremental program, like sometimes we talk Ashwini Radar, QRSAM, MRSAM, these are the further programs which is of — so base order of minimum of INR15,000 crores is always there based on the old upgrades as well as spares as well as maintenance services for which equipment have already been supplied. In action, these programs also build upon them. So as it is — as we say last — next year also, the base order book of INR15,000 crore to INR20,000 crore is there. What we talk of QRSAM is over and above that — QRSAM is a special thing so we are adding a one-off for next year. So similar programs will keep coming every year because so many R&D spend is also going on in the company. So there are many programs of the Ministry of Defense which are going on. So as the — what to say, as the program fortifies in the future, we see more and more good base orders coming in.
Amit Mahawar
Very helpful, sir. Thank you very much, and good luck.
Manoj Jain
Thank you.
Operator
Thank you. The next question is from the line of Harshit Jitendra Kapadia from Elara Capital. Please go ahead.
Harshit Jitendra Kapadia
Yes. Thank you for the question, and congratulations for a good set of results. Just two questions from my side. Starting on the order book of INR75,000 crores, could you give us a tentative breakup regarding how much of the order book is still left for LRSAM, MRSAM, the Electronic Warfare System, IACCS which you generally give and so many other large project which is there in the pipe?
Manoj Jain
LRSAM order book as on 1st October is around INR4,200 crore, pending order out of INR74,500 crores what we told. LRSAM INR4,200 crores, IACCS is INR2000 crores. Akash Prime is INR3,500 crores. LC Avionics is INR1,600 crores, D-29 EWS is INR1,300 crores, Akash-Radius-CNRF [Phonetic] is INR1,500 crores, MSWS is INR1,000 crores, and all others are below INR1,000 crores. These are the major orders. INR4,000 crores of LRSAM, INR2,000 crores of IACCS, Akash Prime INR3,500 crores, LC Avionics INR1,600 crores, D-29 EWS is INR,1400 crores, Akash C, INR1,500 crores and the MI-17 upgrade, INR1,000 crores. These are the major orders out of the INR75,000 crores order book what we told on the 1st October.
Harshit Jitendra Kapadia
Okay. And the LRSAM and MRSAM execution would be completed by FY26. Would that be a correct understanding or would it be — may go even to FY27?
Manoj Jain
So as of now I think ’26 only. But some payers and other small quantities only may spillover to next year. Major will be over in next year.
Harshit Jitendra Kapadia
Okay. And just continuing on the previous question on the order inflow part. If you can also highlight apart from the QRSAM which you expect of let’s say the first batch of INR12,000 crore to INR14,000 crore, any other large program that you envisage for FY26 when you give a guidance of INR37,000 crore, INR38,000 crores in terms of order inflow?
Manoj Jain
See, as we are telling there is a base order which you are expecting of…
Harshit Jitendra Kapadia
Yes.
Manoj Jain
— INR3,000 crores which comes up from the old programs. This QRSAM is a one-time high value order which you are talking about for the coming year, next year which you are telling, it may come. There are many other programs which are coming up on whichever R&D is going on. We are working on those programs. It would not be fair on my part to name all the programs at this juncture. Please understand it’s open forum, so we cannot name all the programs what we are — what the company is working on.
Harshit Jitendra Kapadia
Sure, sir. Okay. I wish you all the best. Thank you.
Manoj Jain
Okay, thank you.
Operator
Thank you. The next question is from the line of Deepak Krishnan from Kotak Institutional Equities. Please go ahead.
Deepak Krishnan
Sir, thank you for your opportunity. Just wanted to understand defense, non-defense mix for 2Q as well as one 1H FY25.
Manoj Jain
As such overall we told, overall it is 85%, 15%. 85% to 89% is typically defense and 10% to 15% is typically non-defense. And quarter-to-quarter although we don’t minutely check that, but the ratio will be similar order only in each quarter.
Damodar Bhattad
If you are really precisely interested in the first half of ’24-’25, it is 87% defense, then non-defense, 3% export.
Deepak Krishnan
Sure. Sir and maybe just sort of a split on how much is indigenized versus how much is foreign collaboration?
Manoj Jain
Total overall in this — typically around 85% to 88% of the products which we supply are either in-house or by other indigenous sources like DRDO and any other Indian company. And typically ToT [Phonetic] component is of the order of 10% to 15% only. So, in general, we maintain that as a logical mix because some ToT products also are required for growth, turnover and urgent requirements of the user. But over a period of time, those are also we are in the process of indigenization. So typical ratio of around 80% to 85% of total in-house come other indigenous sources of DRDO et cetera the technology we are delivering. So that ratio we are more or less tracking and maintaining.
Deepak Krishnan
Sure, sir. Maybe just wanted to sort of understand our sort of ability to continuously sort of report EBITDA margins substantially higher than what is sort of the margins for a typical nominated contract. Sir, how does it affect your future negotiations and upgrades? Or is it like every product is sort of looked at a new product? So even if you’re sort of reporting substantially higher than nominated ranges, you can still continue to enjoy that because of our own sort of cost efficiency measures.
Manoj Jain
The thing is, overall, how we earn profit is not based on only margins. It is based on overall indigenization efforts if we put. We give the most optimum solution to our defense forces, the most economical way of solving a problem. So there are various ways. And overall again different types of product mix are there, which gives us — some gives us slightly better margin, some gives us slightly less margins. So overall margins are good because we have put lot of effort on R&D in-house as well as supporting industry also. So this indigenization effort or this in-house R&D efforts only gives us more and more margins in long term.
Deepak Krishnan
Sure, sir. Those are my questions. And best of luck for future quarters.
Manoj Jain
Okay, thank you.
Operator
Thank you. The next question is from the line of Gagan Thareja from ASK Investments. Please go ahead.
Gagan Thareja
Yes. Good afternoon, sir. I hope I’m audible?
Manoj Jain
Yes.
Gagan Thareja
Yes. So in last quarter you indicated that you will also be doing work related to Kavach which is the anti-collision — train anti-collision systems. I think some large orders were to be placed in October, November for that. Any news flow regarding that? Has BEL participated there?
Manoj Jain
No. In the Kavach program, we told our intention now that [Technical Issues] to enter into this Kavach development. This development is a involved process. So right now railway has given us one execution — small execution order to prove our capability and that order they have told around 18 months time to prove that on a small section. So we are in the process of development of this Kavach ourselves and we have to install it in that small execution place. And once we qualify, then only we will be given bulk production clearance. So right now we are in the process of building the prototype — developing and building the prototype, and then only this bulk production activities will start.
So at least we have got this order from railway for development, right? So we are in that phase because that way only railway work. Firstly they give a small execution order based on the capability shown by us. So we have proved our capability. After witnessing that capability, they have given us a small execution order to execute and the detailed evaluation will be done on that order, that particular execution order where we will install it also. And there only the efficacy of our system will be verified by railways. And once that is done, then only we will migrate to participate in bulk production related order.
Recently they have — RFP they have issues, there we cannot participate because we have not crossed that particular milestone. So once we cross that milestone, the next order, when it comes bigger order definitely will participate. But this present order, we cannot participate because we are still in that prototype verification phase for the Kavach.
Gagan Thareja
Okay, sir. Sir, second question on having around manpower and talent. One, wanted to understand the attrition rate in the company. And two, I think there were some news, some media articles that you had given offers to graduate trainees in IIT Mandi. But finally, none of them joined. Is there — therefore a challenge in terms of getting quality land parts, so attrition and hiring are two aspects I want to understand.
Manoj Jain
Firstly, luckily we are not having attrition problem to the extent what this IT sector and other electronic sector persons are facing, because of overall environment which we give to our manpower, the overall growth and learning opportunities which we give to our manpower. So our attrition rate is typically 2% to 3%. Only during — post-COVID there was a small surge, that time I think we might have touched around 5%. But otherwise, we are generally 2% to 3% only our attrition rate, which is manageable.
What I was referring in IIT Mandi and other places also is now we are growing. So for our future growth and where we have to do lot more of indigenization, lot of more of Make in India and Design in India type of initiative, that requires much more manpower to be put in R&D for us to meet the Government of India timelines and guidelines. So one is doing more and more of indigenization. Second is for our own growth for 15% plus growth, we have to diversify, we have to add so many new products in our portfolio. So that requires more number of manpower. To attract that manpower, we are going to all IITs, NITs, and so many other places. And we are coming up with a better and better reward and recognition schemes, that is a continuous process in BEL. So more and more of those schemes which we are going to give, that will — we are confident that with that, we can attract the talent and increase our manpower considerably, especially in R&D.
Gagan Thareja
Sir, what could the hiring program look like, sir? Number of trainees or I mean at a lateral level hiring absolute terms, what is your target annually?
Manoj Jain
No, this year — in next 12 months we have set our own target that in next 12 months, we should have permanent manpower minimum 1,000-plus we are going to add, that we have already got from our board approval also. So that is for permanent manpower. And I can tell you if permanent manpower itself we are going to have 1,000-plus more, all other contract manpower for like trainee engineer, research, project engineers, et cetera, minimum this much number always will be there. So around 1,000-plus additional of other variety manpower we will have. 1,000-plus permanent manpower, which we are committing. For next 12 months, we have come out with a plan — internal plan for that, and we are confident we will exceed our that aht internal target of manpower hiring also.
Gagan Thareja
Sir, final question from my side.
Operator
Sorry to interrupt, Gagan, sir. Could you please fall back in the question for your final question.
Thank you. The next question is from the line of Rupesh Tatiya from Intelsense Capital. Please go ahead.
Rupesh Tatiya
Hello, sir. Thank you for the opportunity, and thank you for the good set of numbers.
Manoj Jain
Yes.
Rupesh Tatiya
My question is around, AESA radar, sir, Uttam AESA radar for LCA program. So can you give some update on that? Where is that? And when are we expected a large order for that?
Manoj Jain
This Uttam radar, actually — radar as a integration will be done by HAL. Because first Radar, there are a lot of challenges when first time any radar has to be integrated in an airborne platform. So LRD took a calculated task on hand. And based on that they decided let HAL only take the lead for this integration. So as such outcome radar per see will be integrated by HAL only as of now for the first few radars. However, most important component of that CR module and the AAAU we call it. So these modules, definitely there is a role of BEL to play. And BEL is working backward for giving that type of a quality solution to HAL. So it will take some more time for HAL to come out with the order for placing on us. But right now, the radar is going on under integration trials in that stages and it will take some more time to fully qualify. You may be knowing Airborne Systems qualification is a very, very involved process. So that process and overall integration of radar. So, as such Uttam radar will be integrated oblique [Phonetic] managed by HAL. Although the basic components will come from industry and in that industry, BEL is taking definitely good leads.
Rupesh Tatiya
Okay. Okay, sir. Sir, just one follow-up to that, sir, let’s say claims — LCA claims that would be — need to be produced in 2026, the order for that will come in — how much advance? Will it come six months in advance? Will it come 12 months in advance? How does that ordering cycle works?
Manoj Jain
Actually, that question you should ask from HAL. Because if you…
Operator
Sorry to interrupt. The management line has been disconnected. Please wait while we reconnect them back. Thank you.
Rupesh Tatiya
Okay.
Operator
Ladies and gentlemen, thank you for patiently waiting. The management has been reconnected back with us. Yes, sir. Please go ahead.
Manoj Jain
Sorry. I think there was some technical glitch in between. Again, I got cut. I hope now I’m being heard properly.
Rupesh Tatiya
Yes, sir, I understood. So sir, other question is this Shakti EW System, I think another private player I think was declared L1. So was there L1, L2 in that? And did we become L2 and did we get some order of the entire order then to the private player?
Manoj Jain
Which Shakti you are referring because one Shakti is WW Shakti. One Shakti is we have our military communication related Shakti program. You are referring…
Rupesh Tatiya
EW, Electronic Warfare.
Manoj Jain
No, EW Shakti is always is BEL. It is a buyer-nominated equipment and it has — because overall the total solution is developed jointly by DRDO and BEL, hence I don’t think any time it has gone into multi-vendor situation. The Shakti EW was always with BEL and it is with BEL only.
Rupesh Tatiya
I think the private player, Adani I think wrote in its Annual Report that they have been declared L1 for Shakti Electronic Warfare System. So I just wanted a clarification with respect to that.
Manoj Jain
No, no, no. That may be some other contract Shakti maybe they are telling. But this Shakti, Nayan, Shakti, and other EW programs of Naval Ships, we are the buyer-nominated equipment, means our equipment only…
Rupesh Tatiya
Sir, I think this is Airborne. Airborne EW.
Manoj Jain
Airborne EW, different, different name. That is AEW&C now. In AEW&C, we also participated for the new tender where I think — where Adani became L1. But that is a system integration project. There is no development there. System integration based on the CAT [Phonetic] design. So that project we lost to Adani. Yes, because we wanted to enter into this segment. We have never entered. We are only doing life cycle management of AEW&C EW System. But we were not a system integrator till there. So we wanted to enter into that. Unfortunately, in this program, I think that they quoted — they became L1. Although they have not understood the total project nuances or project subsystems, which should be understood very well. But I think for last seven years, some three of their aircrafts are maintained by BEL only. But anyway, they became L1. Let them prove that they can supply in that prices what they have quoted. Best wishes to them. And anyway part of life we when we quote we may become L1, we may not become L1, but this is not a development program, it is a integration program. And mainly it is a CAT driven program. So that program you are right. But we have our own Shakti for Navy Shakti where we are DME [Phonetic]. Hope I clarified to you.
Operator
Thank you. The next question is from the line of Aaditya Jaiswal from Nirmal Bang Institutional Equities. Please go ahead.
Aaditya Jaiswal
Thank you for the opportunity, sir. In the terms of export, like what major orders like the BEL currently have? And the contribution of exports like currently 3%. So in the future, this trend line will be more than 3% or what?
Manoj Jain
Definitely it has to be more than 3%. 3% is not a healthy sign. But export we started with very, very small order book and small orders, et cetera. And to that to reach 3% itself was a challenge. But from 3%, our target is to cross 5% at earliest. Maybe next year and if not next year, next to next year, we will definitely cross 5%. We have overall order book of around $403 million as on today. Various big, big orders are there in that. So we are confident whatever target which we have set for this year, we are crossing that. And next year, it should be more than 3%. I can assure you now itself. It will be more than 3%. Every year by year, we have to increase. And finally, the Government of India wants us to reach double-digits. So we finally have to reach 10% of our turnover in exports. But right now jumping to 10% immediately is not possible because it requires continuous effort, systematic efforts, et cetera. So we are — every year by year, we will increase our percentage of turnover from export. Right now, I can’t tell you when we will reach 10%. But our goal is 10% and it will be a growth path only. Every year, we will increase on whatever we have achieved last year. These two are our guiding principles. Exact values [Technical Issues] we will communicate to you maybe next year beginning.
Aaditya Jaiswal
Sir, can you name a few projects that are in the pipeline for the exports?
Manoj Jain
Major projects in the pipeline, that is — actually around $500-plus million leads are there with us right now. One or two major things actually are there for RWR, MAWS payers and training for this Airbus. What — I think today, the C-295 inauguration is there. For that some expected order is planned. CoMPASS related order and Gimbal related orders from LB [Phonetic] systems for exporting to their — to them so that they can supply to some other country. Some Asian countries related some orders are there, big order, something related to Brazil, something related to Weapon Locating Radar in Egypt. So those type of big leads are there around $500-plus million leads we are working right now. And we are confident we can liquidate as many as possible of them in next one year. This year anyway we are going to — we are — target is around $200-plus million acquisition. So that we are confident we will have that much acquisition extra in this year. And overall order book is healthy from export point of view, the way we are planning, the way our growth is there. We are confident about that.
Aaditya Jaiswal
Thank you, sir. That is from my side.
Operator
Thank you. Ladies and gentlemen that was the last question for today’s conference call. I would now like to hand the conference over to the management for their closing comments.
Manoj Jain
Yes. The future outlook, as we told, we started [Indecipherable]. We are committed to achieve that. So that only shows the overall confidence from BEL management to the investors that what we started the year, we are continuing on that goal and we are confident that we are going to achieve that goal of overall revenue growth of 15%, EBITDA margins of 23% to 25%, order inflow minimum INR25,000 crore we are crossing, we will cross. R&D investment, we have increased INR1,300-plus crore. We are going to have that figure. CapEx INR700 crore plus. And defense, non-defense business of around 85%, 15%. So these are guidance what we had given, we are committed to achieve that for this financial year ’24-’25. Thank you.
Operator
[Operator Closing Remarks]
Manoj Jain
Okay, thank you. Thank you very much.