Bharat Electronics has announced above ₹30,000 crore in new orders in FY24, exceeding the average forecast of ₹27,100 for the entire fiscal year 2023-2024.
Bharat Electronics’ stock price rose more than 2% to a 52-week high in early trading on Thursday after global brokerage firm UBS boosted its target price on the stock. BEL shares rose 2.30% to ₹215.35 on the BSE.
UBS maintains a ‘Buy’ rating on Bharat Electronics shares, raises target price to ₹257 per share from ₹205, and assigns a 35x PE to March FY26E earnings versus 30x earlier, citing improved earnings and new orders momentum.
Bharat Electronics, a defence PSU, has announced over ₹30,000 crore in new orders in FY24, exceeding the consensus expectation of ₹27,100 for the entire fiscal year 2023-2024.
This predicts a 50%+ increase over FY23, with many large-ticket orders being awarded.
UBS has raised BEL’s FY24 new order inflows forecasts by 24% to ₹31,000 crore, reflecting the company’s recent strong orders and faster pipeline closure.
It believes that considerably larger new orders represent the fast-tracking of the defence pipeline, which might help Bharat Electronics sustain a consistent order book ramp-up, justifying higher valuations comparable to industrial peers.
“In our view, accretion (excess in orders booked over sales) of ₹100 billion-plus in FY24E paves the way for an upward revision in topline versus consensus estimates of 14%/14% revenue growth for FY 25/26,” UBS stated in a press release.
According to BEL’s management, many of the significant projects due in FY25 were fast-tracked by the Ministry of Defense (MoD) and awarded in FY24, indicating the government’s rapid completion of defence preparation. The management anticipates total orders of ₹50,000 crore in FY25 and FY26. However, the MRSAM project is still in its early stages and cannot be included.
“As with any long-cycle order firm, the new order run rate is by far the most important value catalyst for BEL since it influences attitude around future revenue growth rates. Other significant indicators for BEL include execution run rate and cash flow, both of which are essentially constant at this stage, according to UBS.
Finally, it feels that the nomination business, which still represents for a significant portion of BEL’s revenues, is critical to its margin trajectory.
Bharat Electronics’ share price rose by more than 17% in one month and 33% in three months. BEL shares are up more than 15% year to date (YTD), and the stock has returned over 121% in a single year.
At 9:55 pm, Bharat Electronics shares were up 1.33% to ₹213.30 on the BSE.
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