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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.
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