Bharat Electronics Gains 6% After Q1 Profit Rises To 15-Times

Bharat Electronics rises 6% following a 15x increase in Q1 earnings. In the last 3 months, its reported total revenue from operations virtually doubled to ₹3140 Crore.

Bharat Electronics: Thanks to high operational income, Bharat Electronics Q1 profit increased significantly to Rs 366 crore. 

Strong operating income helped the state-owned defense corporation increase its consolidated profit by 1,401 percent year over year to ₹ 366.33 crore for the quarter that ended in June 2022. 

Due to the second Covid wave, the base was low in the previous quarter. In Q1, revenue increased by 90.5 percent to ₹ 3,140.6 crore from the same quarter the previous year.

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Bharat Electronics (BEL) reported a 15-fold increase in net profit for the first quarter, which led to a 6 percent increase in share price on July 18.

The business reported that for the three months ending in June, its reported total revenue from operations then doubled to Rs 3,140.61 crore. 

In comparison to the same quarter previous year, it achieved a profit of ₹ 366.33 crore, an increase of ₹ 24.41 crore. After the update, the stock increased by 6% to Rs 260.15 on the BSE.

Revenue was the main driver of the success, according to Morgan Stanley. The broker said that their presumptions are consistent with the advice. 

It recognizes that the earnings predictions for FY23 are currently subject to likely upside risks.

With an already attained target price of ₹ 260, Morgan Stanley maintained its “overweight” rating on the company.

The ‘buy’ rating and ₹ 300 target price were both maintained by ICICI Securities.

The broker noted that the gross margin (with the exception of other operating earnings) had peaked in the third quarter of FY22 and had subsequently shown signs of recovery. 

An increase in fixed expenses has offset the same, resulting in a decrease in EBITDA margin. According to the management’s guidance, “likely, execution will ramp up to restore the EBITDA margin trend.”

Although order inflows were modest in the first quarter, experts do not anticipate risks in Bharat Electronics receiving ₹ 110,000 crore in defense contracts over the next five years given the general trend in military spending and the projects in the order pipeline.

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Exports are a new source of income for Bharat Electronics, according to ICICI Securities, which noted that export revenue increased by almost twofold year over year in FY22.

“Large export orders were placed with Airbus as a result of IAF orders for C295 transport aircraft (to Tata Airbus consortium). 

Additionally, we see a sizable chance for BEL if HAL appears as the leading candidate for numerous international air force bids.