Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
BHARAT ELECTRONICS LTD (NSE: BEL) Q4 2026 Earnings Call dated May. 20, 2026
Corporate Participants:
Manoj Jain — Chairman and Managing Director
Damodar Bhattad — Director-Finance and Chief Financial Officer
Analysts:
Vikash Singh — Analyst
Amit Dixit — Analyst
Unidentified Participant
Umesh Raut — Analyst
Dipen Vakil — Analyst
Mohit Pandey — Analyst
Atul Tiwari — Analyst
Amit Anwani — Analyst
Kavish Parekh — Analyst
Harshit Patel — Analyst
Sumit Kishore — Analyst
Teena Virmani — Analyst
Jyoti Gupta — Analyst
Presentation:
Operator
Ladies and gentlemen, Good day and welcome to Bharat Electronic Limited Q4FY26 earning conference call hosted by ICICI Securities Limited. This conference call may contain certain forward looking statements about the company which are based on beliefs, opinion and expectations of the company as on date of this call. These statements are not the guarantee of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participants line will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Vikas Singh from ICICI Securities Limited. Thank you. And over to you sir.
Vikash Singh — Analyst
Thank you Rhea. Good evening everyone and welcome to today’s Q4FY26 Bharat Electronics phone call. From the management side we have with us Mr. Manoj Jain, Chairman and Managing Director, Mr. Damodar Bhattadas, Bhakta Sanant and CFO and Mr. S. Nivas, Company Secretary. Without taking any much time, I’ll hand over to Chairman sir for his opening remarks. Over to you sir.
Manoj Jain — Chairman and Managing Director
Thank you. So Manoj Jain CMD Bell this site so firstly I will talk about the financial highlights of financial year 2526. So the revenue from operations has increased to rupees 27,480 Korea in 2526 as compared to Rs. 23,658 crore previous year with a growth of 16%. The profit before tax increased to Rs. 8,075 crore in 2526 as compared to Rs. 7,090 crore previous year with a growth of 14%. The profit after tax increased to rupees 6,048 crore in 2526 as compared to rupees 5,288 crore in the previous year with a growth of 14 percent.
The EBITDA has increased to 30% in 2526 as compared to 29% in 2425. The earning per share also increased to rupees 8.27 in 2526 as compared to Rupees 7.23 in year 2425. The order book position as on the 1st 4th 2026 is rupees 73,882 crores. And order acquired till 31st March 2026 in the previous year was rupees 30,045 crore. This is a brief financial highlight of financial year 25, 26. As we told in the beginning of the year about the guidance, we have met all the guidance parameters in the last financial year.
Thank you. From my side. As the opening remark,
Operator
Should we begin the question and answer session? Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handset while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. First question is from the line of Mr. Amit Dixit from GS, please go ahead.
Questions and Answers:
Amit Dixit
Yeah, good evening everyone and thanks for the opportunity. Congratulations for a good set of numbers. Sir, a couple of questions from my side. The first question is essentially that the new orders that we are seeing in defense electronics, particularly centered around new age technologies, quantum computing, drone, etc. So how do you see Bell developing capabilities for that? Is it that we are cultivating a system of, you know, startups, kind of working with them to ensure that we get those technologies or we are working with our ecosystem of, you know, other subcontractors, established subcontractors, the unlisted or listed companies in the space.
Just wanted to understand your thought process around it, the kind of capex that it would involve, and how you are building capabilities for these kind of orders that are expected to flow.
Operator
So we cannot hear you.
Unidentified Participant
Huh? Hello? Am I audible?
Operator
Yes, sir. Sir, management sideline, cannot hear you. Oh,
Unidentified Participant
Okay, okay.
Operator
Ladies and gentlemen, the management line is being disconnected. Please wait for a month.
Umesh Raut
I thought I was speaking late. Okay,
Dipen Vakil
Rip up.
Operator
Ladies and gentlemen, the management line has been connected back. Mr. Amit Dixit, could you please repeat your question?
Amit Dixit
Yes, sure I will. So sir, my question was that in the view of the recent orders and developments in the defense electronic space, particularly some of the orders that we have also got in the field of drone, electronics, the new age technologies, quantum computing. Just wanted to understand that, you know, how as well we are developing capabilities for that, whether it is, you know, in house training or whether you are cultivating a system of startups, cultivating those kind of companies that are in new technologies, or is it through the tried and tested mode, the subcontractors that we already have, the kind of capex that would be entailed.
So just want to understand your broad thought process around this. That is the first question.
Manoj Jain
Okay, yeah, I heard your question properly now. So these cutting edge technologies, you know, they have to Develop it in part of all the collaboration partners. Partners for us are DRDO startups, academia and our in house strength. So this drone electronics or drone technology or quantum technologies, whether it is QKD or Quantum safe communication, etc. We are working on all these four pillars of development so we have done a good hands on on these technologies And a few PoCs are also given to our defense users.
So we have totally geared up to tap all these technologies through all these four spectrums of working. I hope I have answered the question.
Amit Dixit
Yes, partially just. I mean just wanted to understand whether it will entail more capex from us going and whether since we are working with a lot of stakeholders whether it will impact our margins going ahead.
Manoj Jain
Firstly let me tell you, margins should be better only when new technologies comes in because new technology means more value addition. So whenever this technology goes to field definitely there will be more value addition from us. So margins will be on the higher side only for that. But right now there are no big ticket projects CAPEX projects on that now coming to capex infrastructure built by bell on that definitely we have developed a good infrastructure because these technologies required a good computing infrastructure.
Firstly because the underlying technology in that is AI and AI requires a very good computing infrastructure whether it is CPU or it is GPUs. So that we have invested heavily and of the order of minimum 100 plus crores in last two years we have invested and at least around 100 plus 100 to 200 crore worth of investments are in different stages of approval. So that is the main capex which is required the building and other infrastructure testing, infrastructure integration, infrastructure that is definitely much less as compared to the compute infrastructure and that also we are creating at three to four places including our CRL Ghazi Awad, our CRL Bangalore, our bstc, our unmanned system, our network and cyber security SBU and our Balasamudram facilities.
So at these five places we are investing on capital or other type of infrastructure. But the CPU comes, GPU infrastructure is actually created already at our CRL Ghaziabad, CRL Bangalore and software as View and PDIC at these four places already it’s been done. Last year we have done some upgradation of the infrastructure and now we are going to create one separate high computing, high performance computing infrastructure very soon.
Amit Dixit
Great sir, the second question is essentially on the semiconductors. So if you could highlight what part of our total cogs is semiconductors and the recent increase in semiconductor prices, whether we are able to pass it on or we have to absorb this
Manoj Jain
Let me tell you, all semiconductors right now are imported because still in India that infrastructure just coming up. But semiconductors although they are very very important component for us but there are other systems, subsystems, other technology components including compute resources and other things are there. SO semiconductors per se is around 17 to 19% of our material cost. VOP. We can, we can say value of production so that is there. So per say semiconductor cost increase, if at all it increases, it affects only this portion only.
So overall on the margin random it may not affect us that much. And of course we are in the process of indigenizing some of the technology itself. That way we will compensate for this price offset.
Amit Dixit
Great sir, I will come back in the queue and all the best.
Manoj Jain
Thank you.
Operator
Thank you. Next question is from the line of Umesh Raut from Nomura. Please go ahead.
Umesh Raut
Hi sir, good evening, this is Umesh Raut here. Sir, my first question is pertaining to submarine program that is being talked about in between India and Europe. European OEM and this is probably getting finalized with Muskon Dockyard with the value of closer to 90,000 corrode. So about this program, what kind of opportunities in terms of flow through orders that BEL can expect?
Manoj Jain
Definitely in all submarine program or ship based program, major electronics comes from Bell. Of course in this program, especially this P75I program there will be some foreign component also because the foreign partner is working with MDL and of course indirectly is working with us also. So some foreign component with good indigenous content will be there. But there are some components which are homegrown and which will be inducted as part of this. So I can again tell you More than 50 to 60% of electronics in this program will be from Belk and we are in very very advanced stage of discussion with MDL and with this foreign partner of MDL for that program.
So there are around six subsystems we call as part of the submarine program. Their technical names are communication suit, navigation, complex system, the combat weapon control system, combat information system, Torpedo fire control system, missile fire control system. Like that some six subsystems are there which are primary, all are electronics driven. So these all subsystems will be part of our bal Kitty.
Umesh Raut
Understood Specifically on this only. So in in per ship cost or per submarine level, how much of electronics could be the percentage cost of total builder total someone value? Roughly ballpark number if you can give.
Manoj Jain
I can’t tell you exactly but around 25 to 30% typically comes to electronics portion generally. But in this particular one because there is a foreign element also it is not Totally homegrown or in house. So that’s why the ratio may slightly vary. 5% plus minus on these numbers.
Umesh Raut
Understood sir. My second question is pertaining to QRSM program. Where are we in terms of finalization? I think in last call you mentioned probably by March or June and this year you are you are signing this contract with the customer. So any update about this and once we get that program, how soon we can expect execution to start and whether we will have similar set of margins as compared to our existing business or margins could be lower in initial stages and probably it could be more back ended in terms of higher margins.
Manoj Jain
Okay, so as I told last time also we were actually hopeful that by last year, last quarter itself we may get or else the first quarter of this year. So we are still fully optimistic that before June end we may get this order. There is only 5 to 10% chance that it may slip to July. But otherwise we are confident as on today also that by June end we may sign this contract. All the formalities, all other evaluations, all technical CNCs etc different stages are there. They all are over now in the process of necessary approvals at various stage in ministries.
So we are confident that in next one one and a half months it should be over. Worst case it must be by one more month. So we are not expecting more than that delay as of today. And regarding the program, once we sign the program within 18 months we are supposed to give the first of production model. So we have already started gearing up the initial homework. What is required for this? We have already started so that we don’t want to slip on this first target of 18 months. We will definitely give our first of production model within 18 months of signing the contract and after that only the real bulk supplies will start.
Regarding the margins etc, it is too early to say whether it will be a bit more than that or bit less than that. Because once we finalize contract back to back contract with our Tire 1, Tire 2 suppliers then only we can come to know how much may be that. But definitely it will be similar orders only may not have too much change but exact quantification of the project. We will come to know once we sign that contract with our Tire 1 and Tire 2 suppliers.
Umesh Raut
Understood. My last question is more of on the bookkeeping side. If I look at other expenses for the quarter gone by, those were up by about 36% year on year. Any one off provisioning that you did during the quarter?
Manoj Jain
Yeah, DF sir will tell. Yeah, yeah.
Damodar Bhattad
These are basically regular provisions due to Increase in operations. For example performance warranty. As the turnover increases we need to provide more for the performance warranty and certain other expenditure which are in line with the scale of operations. Also there are some of course LD related expenditure also in this. So overall based on scale of operations this expenditure has increased.
Umesh Raut
So provisionings for the foliar FY26 more or less were similar to FY25
Damodar Bhattad
Total provisions.
Umesh Raut
Yeah, total provisions as a percentage of sales were similar to FY25. Or were there any any increase in FY26?
Damodar Bhattad
No. FY26 definitely does not increase. It’s almost similar only on the similar pattern.
Umesh Raut
Understood. Thank you. Thank you so much and all the very best.
Damodar Bhattad
Thank you.
Operator
Thank you. Next question is from the line of Deepen Vakil from Philip Capital. Please go ahead.
Dipen Vakil
Thank you for the opportunity sir. And congratulations on a great execution and margin. Sir, my first question is on your existing order books of. So can you help us with the breakup of your existing order book in terms of project wise and what will be the timeline to execute the current order book?
Manoj Jain
Yeah. So the order book of around 74,000 crore mainly consists of some big ticket few items. I will just list them. The electronic fuses, the LRFM, the LCA Mark 1 Mark 1A LRUs Tejas, BMP to upgrade spare services and miscellaneous items. Ashwini radar then EW suit for Mi 17 V5. So these are the major projects which we are going to execute in next two to three years. Out of that I think all items we are supplying next year also. Although the electronic fuse is for another seven to eight years more.
Seven years more and BMP2 upgrade also is for another two years. Remaining are one one and a half years we are going to execute these orders.
Dipen Vakil
Got it. So is it possible to quantify some of the big ticket items?
Manoj Jain
Yeah. Electronics uses around 4300 crore still left for US for next 7 years. LRCM around 3500 crore. LTA around 3200 crore. VMP2 upgrade around 2800plus crores. Ashwini around 2460 crore. Mi17v5 around 2200 crore. Spare services miscellaneous again around 2500crores. These are some of the major items which are to be executed in 26 and beyond.
Dipen Vakil
Got it sir. So my second question is on the line of your order into guidance for the upcoming year. So excluding QR Sam, what can be the order info that you’re looking at in FY27
Manoj Jain
This data. Anyway I will tell in my Closing remarks about the guidance for this year.
Dipen Vakil
Got it. So then I’ll fall back on the Q.
Manoj Jain
Yeah. Thank you.
Operator
Thank you. Next question is from the line of Mohit Pandey from Citi Research. Please go ahead.
Mohit Pandey
Yeah. Good evening sir. And congratulations on strong execution. Continuing. The first question is on the DAC approvals that we saw last year almost 6 lakh crores. And this year we have seen almost 30,000 crores of base orders. So is there a possibility of base orders seeing a step up next year as these orders coming to. As these approvals come into ordering chain?
Manoj Jain
Definitely that. Anyway I will tell in my closing remarks what we are looking at for this year and beyond. So please wait for the closing remarks.
Mohit Pandey
Understood sir. The second is on the other income. It seems to have come off. So what could explain that for this quarter is that
Damodar Bhattad
During the year the average interest rates have been less. Average yield from the banks has been less. That is a major reason for the other income decrease.
Mohit Pandey
Understood sir.
Damodar Bhattad
Also cast some effect on that.
Mohit Pandey
Sorry sir, last part I did not get.
Damodar Bhattad
Other income reduction is on account of these two. Average interest rate reduction and foreign exchange variation.
Mohit Pandey
Understood sir. Sir, and just also wanted to understand on exports the share of export orders in the backlog seems to be increasing. So what is driving that?
Manoj Jain
The order book is healthy from export point of view. Yeah. We have around 96 million US order book for this year, this year and subsequent years. Some of the orders are to be executed in two to three years. But that’s why once we. I will give guidance about this year. I will tell what is executable in this order book in this financial year. What we have planned that I will tell at the end of this.
Mohit Pandey
Understood sir. And one bookkeeping question. If you can share the amount of advances that are there. Yeah. So operating cash flow this year seems to have improved. So is it driven by increase in advances? That is what I want to understand.
Damodar Bhattad
No. Over the year the cash flow has been more or less good. As you can see from the cash balance at the year end advances as the year end is around 12 and a half thousand crores from the customers.
Mohit Pandey
Okay. Okay sir. Okay sir. That’s it. From my side. Thank you so much.
Damodar Bhattad
Thank
Manoj Jain
You.
Operator
Thank you. Ladies and gentlemen, please limit your question to two per participant. Should have a follow up question. We request you to rejoin the queue. Next question is from the line of atul Tiwari from JPMorgan. Please go ahead.
Atul Tiwari
Yeah. Sir, my question is again on the fact that your order book has not grown this year. In fact it has been flat for some time because now your annual order inflows are very small, you know, similar to your revenue number. So in that situation, you know, how long can you maintain this 15% plus kind of revenue growth? Is it feasible to maintain that level or do we come down to a lower level of 12, 13% over medium term?
Manoj Jain
No, definitely that answer. I will tell in the end of this call. But let me tell you, I think last year also we told that every year we get some fixed set of order and every three to four years we get some big ticket projects. And that big ticket projects will take us with a good healthy position of the order book and execution and a good growth rate. So like this year QRFM definitely we are going to get now anytime soon. And that way after two or three years we again have one or two big big ticket items in pipeline which are more than 20205000 crore type of one big ticket item definitely will be there to recoup.
Otherwise the constant order flow will be there based on our all different type of portfolios. So with that definitely we are going to have very very good growth rate and that. Anyway I will tell you at the end of the program but let me again assure you there will not be any downtrend. We have seen we are highly optimistic for next five years at least where our main main leads are. And we are confident we will have higher trajectory only not. Not at all a lower trajectory.
Atul Tiwari
And sir, in addition to qrfam, you know, which is likely to come very soon, could you talk about a few more larger projects say excess of say 50 billion rupees or 30 billion rupees order size which would come to the company over next two years.
Manoj Jain
Yeah, certainly so NGC there are some so many subsystems of NGC next generation Corvette program which definitely will come this year and if few may spill over to next year. Also few subsystems but at least 50% of the subsystems we are hoping to get this year only in NGC program, the Shatrugad and Samagat EW Solutions we are hoping very very soon. P75I which I listed just before. So there are a lot many fixed subcomponents within that. So we are going to get some order for that this year. Hammer program we are expecting very soon.
Shakti Phase 4 We are expecting very soon. MFRX radar for naval ships also we are expecting very soon. So these are some of the big ticket items which we are get going to get mostly in this year itself. A few may spill over to next year so it is 2627 and slightly beyond 2728. This mix of the project which I have listed just now to you.
Unidentified Participant
Okay, thank you. Thank you.
Operator
Thank you. Next question is from the line of Jatin Sangavan from Optiver. Please go ahead.
Unidentified Participant
Thanks for taking my question. My first question is on project Kusha. So I was reading somewhere that India is preparing for maiden firing trial of Project Kush Kusha’s AI Defense interceptor by late July. So just wanted if you could give some color around that and what is our role and what kind of order we could get for this prototype?
Manoj Jain
Let me tell you again, this program is spearheaded by drdo. We are one of the largest development production partner for them. So as such this question is more relevant to drdo. Of course when we are their DCPP partner we know whatsoever portion we are developing for them. So those portions, various radars, various control centers, communication systems, they are in very very advanced stage of delivery or prototype realization. I can only tell about what portion I am driving directly. But the total programs and trial directive and which missile to be tested first and in what configuration.
These all are decided by drdo. So this question actually directly relates to them. So me, I am only answerable for these subsystems right now.
Unidentified Participant
Got it. And the second question is on data center. We have the ambition to target the government data center business. So what’s our order pipeline for this business and are we seeing any success over there
Manoj Jain
Data center business? Already there are so many players so we wanted to give some unique solution. So uniqueness comes from two fronts. One is from security point of view to give a more cyber safe solution that we have taken a few leads where we are adding cyber security components of ours. But otherwise the server and other components are cords. So that is one set of target customers for us. Where we have got some few hundred crore projects only right now. But the big chunk is waiting for us where we wanted to give totally indigenous total data center solution with hardware and software stake also and cyber security components all are homegrown.
A few from our own company and a few from our team Indian development partner cdac. So we are in very very advanced stage of discussions with them to provide end to end totally homegrown data center solutions for large number of customers. Once we click on that, that order we are expecting of the tune of 2,000 to 10,000 crore. Somewhere in between the first order will be from the right now maybe few hundred crore we already have, but a good leads are there. So we may expect around 1000-5000 crore type of business from the first segment of business.
But the larger segment of business is through this total homegrown solution of data center which we are eyeing it like little bit more. So we are in advanced stage of discussions with CDAC and then their Tire 1 Tire 2 suppliers.
Unidentified Participant
Sure, go ahead and thank you.
Operator
Thank you. Next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Amit Anwani
Hi sir, thank you for the opportunity and congratulations for good set of numbers. Sir, first question on the constantly improving gross profit margins. If we see from F24 to now we are almost at 49% so there’s a substantial improvement in the gross profit margin or past two to three years. And considering that you highlighted what is going to come from the current order book for execution, what is your sense on the gross Profit margin for F27?
Manoj Jain
Again I will tell you at the end although I know the answer for many of this because honestly I did not want to repeat that. So definitely I will tell all these points at the end. But let me again tell you this. Profit margins are because of mix of products. So product mix year on year is slightly vary and based on that some variations will be there so that we predict at the start of the year and generally we are up to the mark of what we predict. So this year although we have done the prediction and that predicted value, I will tell you in my closing remarks.
Amit Anwani
Right sir, the second question you alluded that we are looking for at least four to five years of good growth. So just wanted to understand on capacity side, where do we stand in terms of capacity utilization and the CAPEX requirement according to the pace of growth which we are expecting and how much was the CAPEX this year and what is the guidance for CAPEX for F27?
Manoj Jain
Definitely as you rightly told, if we have to have a good growth we should have a good investment plans also. So it is not only the projects, it is the capacity also has to be augmented and that is a continuous journey in bell. But knowing our large base now and with that large base this type of a growth, double digit growth require further investments. But already done a good plan for that and last year I think we had 900 crore rupee capital expenditure was booked this year. Anyway I will tell you at the end it will be definitely much more than that.
But we have much more bigger plans for next three years. Some big projects at Palatamudram, at Chitrakut and Vellore facility, they are in pipeline for us in addition to our Ghaziabad And Bangalore large investments are planned to upgrade the facilities for diversified products and a new dimension of the products which we are going to enter in that a large capex project are in pipeline. So that put together all definitely will make sure that we don’t have a capacity limitation when we execute the projects for years to come,
Amit Anwani
Right? So but currently where we stand like 70%, 80%, how much from the current capacities still is possible? One more year, two more years?
Unidentified Participant
No,
Manoj Jain
It is nothing like that present capacity for one year or two year etc. Because we have again a mix of products, something we produce in house at component level till module 10 system level and some of the projects we are doing only system integration capability. System integration related projects, you know, require much less infrastructure, much more skills at component or subcomponent level. It requires a great capital infrastructure also specialized infrastructure. So as such we can’t tell you my present capacity is for how many more years.
So we have to invest at different places for different type of infrastructure like for semiconductor component assembly and manufacturing we require SMT machines and our clean rooms and our different type of MMIC related MMIC handling type of processes etc. At other end we require large space for missile integration type of projects. So we are investing on both fronts. As such we are not seeing any choking for us for next few years, maybe three to five years. As such there is no choking for the capital infrastructure but we are continuously adding so that we don’t face this type of shocking for next 10 to 15 years also.
Amit Anwani
Right? So finally on status on the MCA project. So we are hearing that land has been finalized for that 15,000 crore project. So any status from your side in terms of RFPs and any other development which might have happened on that side. Thank you.
Manoj Jain
Yeah, certainly as you may be knowing that we are one of the three selected bidders for receiving the rfp. Pre RFP related meetings already happened. So now we are expecting mostly this month and or next month the formal RFP will be received by us means we as a consortium Partner, Bell and LNT. So LNT was our lead bidder. So LNT will receive the RFP mostly anytime in next 15 days to one and a half months and then we will start responding to the RFP regarding development and the land acquired etc.
That is done by ADA, the DRDO. Because again here we will be the DPP partner only for the five number prototype. But the program is being run by ADA Aeronautical Development Agency. So that land and that test facility is actually taken by ADA and that will be used for MCA program. So we will also use during this development jointly with ADA that facility also. But we are also we start investing on our own infrastructure. Once we receive RFP and once we are selected as the selected bidder then of course we will our investment on capital will increase.
Right now we have only done the basic plans. Assuming in case we are the selected bidder, what we have to do. So that type of plans only we have done. But real execution or real investments will only happen once we are selected as the successful bidder at the outcome of this rfp.
Amit Anwani
Thank you so much sir and all the best. Thank you. Thank you.
Operator
Thank you. Next question is from the line of question Ankur Sharma from HDSC Life. Please go ahead.
Kavish Parekh
Thanks. My questions have been answered.
Operator
Thank you. Next question is from the line of Harshit Patel from Equis Security. Please go ahead.
Harshit Patel
Thank you very much for the opportunity sir. So firstly on the pricing in the nomination based contract, when the new PBT norms were announced by the Ministry of defense back in FY20, it was expected that the margins would come under pressure. On the contrary, margins for not just you but the whole defense ecosystem has expanded. So what has enabled this performance?
Manoj Jain
As I told last year also again I am telling you it is the indigenization. Indigenization of critical technology, indigenization of modules, systems, subsystems that has definitely helped all of us for that. And that’s why we are putting all our efforts in increasing this indigenization score for all of us. So one thing is by our own in house efforts we have created even a separate indigenization cell in Bell to closely monitor our own development as well as the development done by our MSME and other startup and other partners.
We are closely monitoring and supporting our ecosystem partner to increase this indigenization. The more faster we do indigenization, the more profitable all of us will be. That much I can assure you it is only and only indigenization which has really helped all of us.
Harshit Patel
When we indigenous a certain subsystem or a module that is definitely known by Dido, by the Ministry of Difference by the ecosystem. So whenever the order placement comes, why the Ministry of Defense is not cutting down on the prices, why they are letting PSU and the entire ecosystem make so I mean much more margins than what they have traditionally allowed.
Manoj Jain
The thing is firstly the role of MOD is to support the industry and to create the good environment of this atmanirbharata or indigenization. So definitely they should not cut the root itself. The thing is, when they do benchmarking of the price. There are various methods of benchmarking. What is the price of this item? If I import, let us say that is a price benchmark price with that and then we do subsequent cost optimization and indigenization that can be flowed back by us for our profit which we will evidently what we do with these profits, you know, these profits we again flow back in the capital or in the R and D.
So this cycle MODI also don’t want us to break. They are actually supporting us to do more indigenization or more Atmanevartha and the policy allows that to happen.
Harshit Patel
Lastly, if you could update us on the UTTAM radar program, Are the quantities and scope finalized by HM and when do you think the supplies from our end could begin? In terms of development of the subsystems that we versus the other player that is also involved, where are we in this particular program?
Manoj Jain
Again the question should be asked from HAL the more because it is HAL and drdo the casdic, they are not lrd. They are the DRDO partner is LRD who is the original designer of UTTAM radar and HAN is the system integrator of UTTAM radar to lca. So the question should be asked to them when and what stage these tests are. As far as I know they were in the very very last stage of testing and clearing this radar for lca. But exactly I don’t know because the question is more apt for LRD and HAL as and when they finalize, they will issue RFPs for the subsystem or components to us.
As for my record as of now I have not received any inquiry from them for this program. So that much is my side status. But the correct status you can get either from LRD or from hl,
Harshit Patel
Right? Thank you very much for answering my questions.
Operator
Thank you. Next question is from the line of Sumit Kishore from Axis Capital. Please go ahead.
Sumit Kishore
Good evening and thanks for the opportunity. My first question is on the net working capital cycle at the end of FY26 it seems to have increased sharply as compared to FY25. Could you speak about the variances which have led to this outcome? It seems the receivable days have also gone up by about 30 odd days. Your Comments please.
Damodar Bhattad
Yeah, current cap current ratio is around 1.97 as compared to 1.76. We are right that receivables have gone up in the current year as compared to last year. There were some constraints from the customer side during the previous year which money are subsequently received in April and May so that is the reason why at the year end number appears to be higher than last year. But this amount, what was to be received in the previous year has since been received in the current year.
Sumit Kishore
Okay, so the more sustainable level of receivable cycle should be what, 130, 140 days of sales or
Damodar Bhattad
It has been in the constant around 140 to 150 days for the past four or five years. I think it should be around that level. 1.
Sumit Kishore
Got it. My second question is on the operating cash flow to EBITDA ratio. So basically Your EBITDA in FY26 was about 8,000 crores and your cash flow from operations as reported in the BSE filing was about 1490 odd crores. So which is a conversion ratio of about 19%. In FY25 this ratio was about 6.8%. And if I look at the cumulative operating cash flow reported over last four years to cumulative EBITDA reported over last four years, the conversion factor is about 33%. So I mean typically companies in the capital goods sector would have better conversions of EBITDA to operating cash flow.
Your comments please
Damodar Bhattad
See Overall the breakup of the operating cash flow item wise has been given. The statement which has been uploaded on the stock exchanges, all the details of each individual items have already been given. So that way all I can say is instead of answering you so much technically that what is the ratio? All I can say is the current cash question is reasonably okay for us to sustain the plans which you have got for for the future.
Sumit Kishore
Okay. Okay. Thank you so much and wish you all the best.
Operator
Thank you. Next question is from the line of Kavish Parekh from 361 Capital. Please go ahead.
Kavish Parekh
Hi, thanks for the opportunity. So firstly on the current supply chain environment, given the macro situation, are you witnessing any disruption in sourcing or availability of critical components and semiconductors you did talk about earlier, but could you also indicate the key countries or regions, especially in the Middle east from which you import critical components and whether you see any impact on execution timelines or margins in the near term?
Manoj Jain
No, the supply chain per se is definitely slightly affected, especially the Middle east crisis and some of the sub components for major designs, major programs like LRC were coming from Middle east. So definitely there was a delay of around one one and a half months for us and that’s why we wanted to achieve slightly better revenues. There was a minor setback, but that setback was only for few months. So overall I am not seeing any major impact for us for our turnover revenues etc. When we see the year, so year on year I don’t see any much challenge.
And same thing is about semiconductors also very very few semiconductor comes from Middle east. Actually some detectors and other high end detectors etc. Otherwise major semiconductor ICs etc. Comes from Europe or US type of sources or some Taiwan. So we are not per se affected that much. When we see yearly targets or yearly Spanish about this Middle east crisis, some variations in month to month or up to 1/4 to next quarter spilling over etc. There which are part of life for us and we are doing sufficient planning based on whatsoever we can speculate and then make our own targets, our own monthly targets and quarterly targets based on that we do some minor corrections, etc.
But as such we are not forcing any major challenge for us,
Kavish Parekh
Right? Understood sir. Secondly, you did highlight indigenization as one of the key levers for margin expansion that you have delivered over the past several years now, few years now, what would be the current level of indigenization across your product portfolio and how has this evolved over the past few years? And going forward, what is the scope or headroom to further increase localization? And to do that do you see any bottlenecks whether in terms of technology access or local component ecosystem testing cycles, capabilities with local vendors, etc.
Manoj Jain
Indigenous content as you know, nowadays Government of India policy itself is minimum 60% in all our new projects. So we are of the order of 80 to 85% mostly in our indigenous content for various programs. So it depend upon the different type of product and product mix, our homegrown products or our DRDO driven products, it sometimes touches even 90%. Also some other programs where still we are depending on ToT which we had taken a few years back, we are around 55, 60, 65%. But overall it will be more than 80%.
And right now the main limitation which we are foreseeing is about the semiconductors only because otherwise module subsystems level enough infrastructure in India has been created so we are not seeing much challenge for that. But semiconductor, it will take at least few more years before the semiconductor ICs we start getting from India itself. So that will affect us on the indigenization score slightly. But next two to three years between 80 to 85% on an average indigenous content will be there for our product.
Kavish Parekh
Understood sir. And lastly, any incremental opportunities that you see on the non defence side or international markets, such as the export fees, to be materialized over the next say 12 to 18 months.
Manoj Jain
Definitely both of these areas Are very, very important for us to maintain this double digit growth. So non defense right now it is 8 to 10%. We wanted to steadily increase it to 15 to 20%. And the same thing is about export which is 4 to 5% right now over a period of time. But that period of time is around 4 to 5 years. We want to increase it to more than 10% of our turnover. But in near future of next one one and half year the increase will be maybe 1 or 2%, not more. But definitely due to the increasing side only both fronts non defense as well as exports are increasing.
Their contribution is increasing only in our overall turnover or other venues.
Kavish Parekh
All right, so that was helpful. Thank you so much. All the way west.
Operator
Thank you. Next question is from the line of Tina Virmani from Motila Loswal Financial Services. Please go ahead.
Teena Virmani
Yeah, thanks for taking my question. Sir, my question is related to networking capital and part of it you have already answered my question is related to the customer advances because that number also as a percentage of sales or as the number of days has also been coming off from past two years. And how do we see it going forward from the new orders that you are likely to get, particularly the bigger orders like QSIM and all what kind of customer advances will be there? So how to look into this aspect?
Damodar Bhattad
See the contract for QSM is under finalization so we’d not like to comment much on that as to what are the terms and what are the prices because that is under finalization. The overall advances as I told you is around 12 and a half thousand crores as on 31st March 26th. And as far as the operating cash is concerned and cash flow is concerned, as I told it is good, good for us to sustain this the expansion plans what we are contemplating in the coming years.
Teena Virmani
But in terms of the advances that you get from the incremental order influence because order inflows for the company has been fairly good in last couple of years. So the customer advances are not moving in line with those. So how do we, how do we
Damodar Bhattad
Depends on the various payment terms of every contract. Every contract is different and it depends on the payment terms which are initiated in the contract. So there are contracts where there are advances stage payments, whereas there are some other contracts where the terms are little different. So it is that way the mix of contracts.
Teena Virmani
Okay, understood. So it’s not like uniform across all the projects because mostly everything is coming in from Ministry of Defense
Unidentified Participant
That
Damodar Bhattad
It is this term and this is term and it’s final for all the context it is not that way.
Manoj Jain
And when we do our costing, we take care of this parameter Also what is the advances or schedule of payment for every program we take based on that. So nothing is alarming as such for us. Understood.
Teena Virmani
And my last question is regarding the bigger export opportunities. Which do you think that that can materialize in over, let’s say next one to two years on the bigger platforms that you are working upon. Or it will be like the smaller type of export orders that so far you have been doing?
Manoj Jain
No, definitely smaller orders much where we were there that repeat business is there for those orders. But some other big ticket items also we are working right now. And communication equipment was one such project where last year itself we have got very good order and opportunities for this type of communication equipment. Especially SDRS and others and communicate satellite communication systems. So those type of large order are expected for these two. And after Opsindor we have got very good leads for truncated C4I solutions.
Also customized C4I solutions for various countries. So there are also system oriented solutions. So some big ticket items where big ticket leads are there related to that. But of course whatever we had received earlier in last five years that related repeat orders from the same customers are also coming up as a regular business for us.
Teena Virmani
And how long will it take for these big ticket leads to materialize?
Manoj Jain
They are of different varieties. Like one of the lead was materialized last year just I think in the month of March that way this year also there are one or two to big lead tickets items are there. But as you know in exports the real challenge is to acquire an order. Because there are so many geopolitical situations, complications, etc. So until we receive an order for us it is a lead only. We don’t really can predict this. I will get by such and such time much more certainty. I can tell you about our own indigenous programs or our own Indian programs.
But in export that type of certainty is not there. That’s why we take so many leads in our pipeline and then only give you some calculated score based on our experience. How much will definitely we may realize in this year. But there is always a iota of doubt when it comes to export order acquisition.
Teena Virmani
Got it sir. That’s it on my side.
Operator
Thank you. Next question is from the line of Hardik Rawat from IIFL Capital. Please go ahead.
Harshit Patel
Thanks for the opportunity, sir. Firstly wanted to get a clarification of something you mentioned with regards to the P75 order. What you mentioned is that typically electronic systems make up anywhere between 25 to 30% of the of the project cost. And since here you have a foreign player Bell’s share would be around 50 to 60%. So which would mean that roughly in any between 15 to 18% of the overall project size should come to us. Would that be the correct understanding Based on the comments
Manoj Jain
Macro level you are right but micro level when we will go to individual line item it may be minor plus minus can be there but definitely it is a big order for us. It will be a big order for us but as I told now some of the items are coming from the foreign partners so that partner related work share.
Unidentified Participant
Hello? Hello? We
Operator
Cannot hear you. Hello sir.
Unidentified Participant
You’re talking about the management, right?
Operator
Yes sir. One moment please. Ladies and gentlemen please stay connected till we connect the management back. It. Ladies and gentlemen, the management is corrected back. Yes sir. Yeah,
Manoj Jain
Sorry for the technical glitch I believe again so we will take few more questions because we are interrupted because of this technical glitch. So we’ll take a few more questions.
Harshit Patel
Yes sir. So. Hello.
Manoj Jain
Yeah please.
Harshit Patel
So your answer wasn’t audible. I think you know you were speaking for the submarine order in terms of the receipt and execution. If you could share on elaborate further on that.
Manoj Jain
I was telling what’s or your prediction of calculation is more or less right. However there is a small surprise element because some of the foreign component items, how much and what module we will indigenous in that because some of the things they may indigenous from some other Indian partner also. So that nitty gritty of those foreign component still has to be finalized with them. So that’s why this prediction may go by a few percent here and there.
Harshit Patel
Got it sir. And once the order is received for any idea as to how long would the execution cycle be? As in what are our expectations once the order is received?
Manoj Jain
I think it is of the order of five years if I am not wrong. Roughly because again there are six submarines so there is a definitely a submarine development plan timeline that will be decided by mdl. I don’t foresee any challenge for us per se for making those electronic items. But that depends upon the submarine development time, manufacturing time. Based on that only they will expect my delivery schedule to align with them. So that’s why I will align with their delivery schedule. We don’t have any capacity or other limitation for the program essence
Harshit Patel
Professor. That’s. That’s really helpful. My second question is with regards to the new products that are under development especially the directed energy weapon system. So if you could we could you know, elaborate a Bit on this as to what is Bell doing here and how are we working with DRD on this project?
Manoj Jain
Definitely we started working with the DRDO in this program. Of course our CRL Bangalore was doing something on their own also jointly with IISC and our own internal strengths. But the majority of this DAW development we are depending largely on drdo, the CHESS who is there for the laser based DEW and MTRDC for microwave based dew. So we are their largest development production partner for most of the DEW programs. However, we have also started indigenizing some of the critical subsystems of these programs on our own so that overall indigenous content becomes more and more and overall atmanirbharata in this critical technology segments become more and more.
So that we are doing with our internal funded programs being spearheaded by our PRN and well supported by our Product Development and Innovation Center. So that also is in pipeline for us. But majorly we are depending on DRDO right now for these two programs development and we are supplying some developmental orders for them as well as where we are supplying some user driven programs. So we are supplying to users some of the DEWs as part of our D4 projects etc. But some of the large DW programs we are, they are DPP partner and we are supplying to them these modules based on the design done by them.
Harshit Patel
Got it. So that’s very helpful. So lastly again, you know, getting back on the point that was highlighted earlier by another participant on our margins are if I look at our margins, you know, thanks to the kind of improvement that you’ve seen in gross margins owing to indigenization, what you mentioned, these are at record high at about 29 odd percent. And congratulations sir that you know, we have consistently outperformed what we’ve guided. So but this sort of begs the question that, you know, starting fourth quarter FY27 we might see some sort of increase in provisioning due to the pay commission changes, although that does not affect us directly.
But I’m assuming that, you know, considering last time, you know, when there was a change in the pay commission, our employee cost also increased by 20% plus on a YY basis. Do you expect, you know, these kind of margins to be sustainable? At least what we have sort of achieved in FY26, if any dilution that you’re expecting, you know, how severe this dilution could be and could the increased employee cost have a hand in this going forward? Assuming that, you know, our gross margin profile by virtue of the indigenization that we have achieved and that we’re going to achieve should remain high.
Your comments here, sir, please.
Manoj Jain
When we give guidance, we take care of all the parameters. So just at the end now in other few minutes when we will give guidance to you. For this year definitely we have taken care of all the parameters including wage revision of our employees which is due in 1127. So only last quarter we may expect a little bit more wage exposure expenses. Taking into consideration that our indigenization our all product mix of this year. Based on that only we will we have arrived at the guidance which I am going to tell you very shortly.
Harshit Patel
Got it. So this is really helpful. Thank you so much and all the best.
Manoj Jain
We can take one last question and then we will have closing remarks and guidance.
Operator
Understood. Okay, so next question is from the line of Jyoti Gupta from Ashika Institutional Equities. Please go ahead.
Jyoti Gupta
Good evening, sir. Great set of numbers, Mike. I do have many questions but I’ll ask this one. With strong cash generation, how is Bell thinking about capital allocation? Is it through higher dividends, acquisitions, technology investments or inorganic expansion?
Manoj Jain
Madam, definitely we should work on all the parameters if we have to grow with double digit growth for next five to 10 years. So we have our own different plans. We have a strategic planning group headed by a general manager who plans all these things and well supported by our corporate finance group. And they come out with these plans where to do this allocation and which area to invest more for next few years to come. And it is definitely a logical mix of various parameters or various portfolios which you have mentioned.
So that is our internal plan which we generally don’t come out. But let me again assure you we take care of from all fronts so that our growth is consistent.
Jyoti Gupta
I’m sure you will, sir. So I’m hoping over the next five years you would be looking at top two, top two to three technology platforms or products where you think that you can materially change Bell’s revenue profitability profile.
Manoj Jain
Well, it is not two or three. We have at least eight to ten different high end technology driven programs where we are investing at least 200/CR on each one of those technology programs. So they are covering almost all major areas where Bell is right now a leader. So to continue to be a leader, we have to do good investment in those products stroke technologies. So. So that is there in our technology roadmap plan. That plan we formally don’t disclose. But in various technological forums indirectly we mention that to all of you.
Maybe at next occasion sometime when this type of a technical event is organized by you, we Will definitely come out and give you those project details.
Jyoti Gupta
Great. And I’ll take the rest of the questions I’ll discuss with you offline. Thank you so much.
Manoj Jain
Thank you.
Operator
Shall
Manoj Jain
We madam have closing remarks?
Operator
Yes sir. That was the last question of the day. I now hand the conference over to management for closing remarks.
Manoj Jain
Yeah. So as we told a future outlook for year 2627. After taking into consideration our present base, our present product mix, our present order book etc. And seeing all other challenges or geopolitical situations in mind. So we are retaining our revenue growth of more than 15%. So definitely we are going to have more than 15% as a revenue growth for 2627. EBITDA margins will be more than 28%. The order inflow we are expecting this year more than 55,000 crore. That includes of course QRFM which we are expecting very soon.
R and D investment we have continuously increased in last two years to keep pace of the technology and to see enter into the new areas of business operation. So this year we have targeted a value of around 2,200 crore rupee investment in RD. And same thing is the capex also again 20 plus percent growth. So we are targeting more than 1200 crore rupee as a capital investment for this year. And defense to non defense ratio more or less it will be 90 to 10 maybe plus minus 1%. It may vary based on our new plans for non defense business.
But that will. We will anyway tell you in the middle of the year whether it is slightly changed. But as of now the guidance is 90 raised to 10 for defense and non defense business. So this is a guidance for the year from my side as closing remark. Thank you.
Operator
Thank you on behalf of Bharat Electronics Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.
Unidentified Participant
Thank you. Thank you.