Earnings Outlook
Bharat Electronics' Oct-Dec revenue to grow in high teens
This story was originally published at 12:59 IST on 28 January 2025
Register to read our real-time news.Informist, Tuesday, Jan. 28, 2025
By Akshay V. Johnson
MUMBAI – Bharat Electronics Ltd. is expected to report revenue growth in high teens for the December quarter led by a healthy execution of the order book, analysts said. However, most brokerages expect the company's margins to decline on-year because of a less favourable product mix. The company's net profit is expected to grow only in single digits due to this contraction in margin.
Bharat Electronics is expected to report a net profit of INR 9.57 billion for the latest quarter, up 7.1% on year, an average of estimates from nine brokerages showed. Among the nine brokerages, Elara Securities (India) Pvt. Ltd. projected the highest net profit for the company at INR 11.32 billion, while Nirmal Bang Equities Pvt. Ltd. estimated it the lowest at INR 8.31 billion.
The company's revenue is seen growing 18.4% on year to INR 48.99 billion for the December quarter, according to an average of estimates from nine brokerages. Of the nine estimates, the highest estimate was INR 51.16 billion by JM Financial Institutional Securities Pvt. Ltd. and the lowest was INR 45.17 billion by Nuvama Wealth Management. Sequentially, the company's net profit is expected to fall 12.4%, while the revenue is expected to grow 6.9%.
The company's gross margins for the latest quarter are set to normalise after the spike in the September quarter, Motilal Oswal said. The margins are expected to decline to 2023-24 (Apr-Mar) levels and contract by 40 basis points. The margins of the company are a function of the product mix and can vary sharply during the quarter. Further indigenisation of modules and subsystems is expected to support Bharat Electronics' future margin expansion, the brokerage added.
The company's order inflow for the first nine months of the current financial year has been muted at INR 98 billion and it has only achieved 40% of its FY25 guidance, Kotak Institutional Equities said. Hence, clarity on tendering of large orders in the March quarter remains a key thing to watch out for, the brokerage added. Kotak estimates the company's EBITDA margins to decline 70 basis points on year to 25%. However, the brokerage estimates the company will report an EBITDA margin of 27% for FY25, more than its guidance of 25%, largely driven by strong performance seen in the first half of the current financial year.
The company's long-term prospects will remain strong, driven by a robust order backlog and pipeline, aided by the government's push on defence indigenisation, the company's diversification into non-defense verticals, and improving margin profile, Prabhudas Lilladher said. The brokerage estimates the company's revenue to grow at a compound annual growth rate of 16% over FY24-FY27.
During the latest quarter, the company secured orders worth INR 9.7 billion to manufacture platform screen doors intended for metro rails, radar, communication equipment, among others, Nirmal Bang said. The public sector undertaking got orders worth INR 6.3 billion from the Ministry of Defence for the upkeep of the Akash Missile System, telescopic sights, communication equipment, and electronic voting machines, the brokerage added. The yearly defence output has surpassed INR 1.27 trillion and is expected to reach INR 1.75 trillion by FY25. With a target of INR 3 trillion in defence output by 2029, India is solidifying its standing as a global defence manufacturing hub, the brokerage said.
Bharat Electonics' earnings before interest, tax, depreciation, and amortisation is estimated to be INR 12.14 billion, an average of estimates from eight brokerages showed. The estimates for EBITDA ranged from INR 10.84 billion by Nuvama to INR 14.19 billion by Elara Securities.
Between Oct. 24--when it had reported its September quarter earnings--and Jan. 27 close, shares of Bharat Electronics have fallen 8.2%. Of the 13 brokerage reports on the company available with Informist, 12 have a ‘buy' or equivalent rating, and one has a ‘hold' rating on the stock.
The company is scheduled to announce its December quarter results on Thursday. At 1212 IST, shares of the company traded at INR 301.95 on the National Stock Exchange, down 2.9%.
Following are the Oct-Dec earnings estimates for Bharat Electronics Ltd. based on reports compiled by Informist from nine brokerages in descending order by the estimate of net profit:
|
Brokerage firm |
Net Sales (in mln INR) |
Net Profit (in mln INR) |
EBITDA (in mln INR) |
|
|
Elara Securities (India) Pvt. Ltd. |
50,536.00 |
11,321.00 |
14,185.00 |
|
|
Nomura Equity Research |
50,277.00 |
10,382.00 |
12,557.00 |
|
|
Motilal Oswal Financial Services Ltd. |
49,662.00 |
10,306.00 |
12,415.00 |
|
|
JM Financial Institutional Securities Pvt. Ltd. |
51,163.00 |
9,891.00 |
12,326.00 |
|
|
Kotak Institutional Equities |
48,697.00 |
9,314.00 |
12,199.00 |
|
|
Prabhudas Lilladher Pvt. Ltd. |
49,187.00 |
9,188.00 |
11,411.00 |
|
|
Nuvama Wealth Management Ltd. |
45,174.00 |
8,884.00 |
10,842.00 |
|
|
Sharekhan Ltd. |
47,120.00 |
8,490.00 |
– |
|
|
Nirmal Bang Equities Pvt. Ltd. |
49,078.00 |
8,310.00 |
11,220.00 |
|
|
Average |
48,988.22 |
9,565.11 |
12,144.38 |
End
Edited by Namrata Rao
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