Bharat Electronics Ltd Q3 FY24 Earnings Conference Call Insights

Key highlights from Bharat Electronics Ltd (BEL) Q3 FY24 Earnings Concall

• Financial Performance
  • Revenue increased 4.35% YoY to INR11,485 crores in Q3FY24.
  • PBT increased to INR2,949 crores, up from INR2,915 crores in Q3FY23.
  • PAT also increased compared to previous year.
  • EBITDA increased compared to previous year.
• Order Book Update
  • Order inflow guidance for FY24 was INR20,000 crores.
  • Already received orders worth INR26,761 crores till Dec 2022.
  • More orders expected going forward.
  • Order book of INR76,400 crore as of Q3, 2x book-to-bill ratio.
  • Growth drivers: Shakti EW system, BMP upgrade, QRSAM orders.
  • Expect INR50,000 crore orders over next 2 years.
• Margin and Growth Outlook
  • Higher revenue scale driving margin expansion.
  • Leverage on fixed costs and operating efficiencies.
  • 25% growth unrealistic given large revenue base.
  • 15% growth more realistic guidance.
  • Growth to catch up next year if Q4 impacted.
  • 9M FY24 gross margin at 45%, full year guidance at 42%.
  • 9M FY24 EBITDA margin at ~23%, full year guidance retained at 23%.
• Israel Exposure
  • LRSAM order book exposure around INR6,500 crore.
  • Other Israel linked projects around INR2,000 crore.
  • Total near-term exposure around INR4,000-5,000 crore.
  • Working with partners to mitigate delays.
• Capex Plans
  • INR 700-800 crore per year guidance.
  • To support execution of large order book.
  • Capex intensity around 5% of revenues.
• Growth Opportunities
  • Avionics scope in HAL’s SU-30, LCA upgrades.
  • Premature to quantify exact contract value.
  • Participate in big ticket programs on avionics.
• Cost Structure Trends
  • Other expenses increased with volume growth.
  • Fixed cost leverage at higher scales.
  • Employee costs increased due to increments.
• Non-defense Growth Plans
  • Currently 20% of revenues from non-defense.
  • Focus areas: Metro, aviation, cybersecurity, IT infrastructure.
  • Targeting higher growth in non-defense revenues.
• Exports Outlook
  • Exports at INR 400 crores in 9M FY24.
  • Continuously exploring opportunities.
• Civil Business Outlook
  • Currently contributes 20% of revenues.
  • Orders are small ticket size and competitive.
  • Hard to quantify order pipeline.
  • Targeting 15-20% share of civil business.
• Drone Business Focus
  • Focus on payloads and anti-drone systems.
  • Tie-ups for drone manufacturing.
  • Payloads & counter-drone significant opportunity.
• Indigenization Boost
  • Positive lists include BEL product domains.
  • Direct correlation difficult to establish.
  • Expect tailwinds from indigenization push.
  • Export orders also an opportunity.
• Working Capital Trends
  • Current ratio maintained at 1.5x.
  • Trade receivables at INR7,700 crore.
  • Cash balance of INR8,000 crore.
  • Healthy liquidity position.