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.