Earnings Outlook
Bharat Electronics PAT seen dn on high base, falling sales
This story was originally published at 20:44 IST on 14 May 2025
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By Avishek Rakshit
KOLKATA – Bharat Electronics Ltd., one of the biggest beneficiaries of the government's defence equipment indigenisation drive, has consistently drawn investor attention thanks to the size of its order book. The company has also beaten analysts' earnings estimates for quite a few quarters now. In the March quarter, the company's on-year growth is likely to slow down, primarily due to a high base, according to analysts.
The state-owned company is expected to report a near 3% on-year decline in its Jan-Mar net profit to INR 17.4 billion and its revenue growth is likely to taper off to over 4% on year to INR 89.1 billion, according to the average of estimates from 10 brokerages. In the year-ago quarter, the company had reported a 32% on-year jump in revenue to over INR 85.3 billion and net profit had shot up by 31% on year to nearly INR 17.8 billion. The company saw a rise in its financials in the year-ago quarter on account of heavy order inflow from the defence segment. Timely execution of these orders helped the company earn higher revenue and improved profits.
Despite a robust order book of INR 717 billion, Bharat Electronics is likely to face the impact of a high base, which could weigh on its on-year financial performance in the March quarter, analysts warned. However, on a sequential basis--which filters out the base effect and highlights the company's ongoing momentum--revenue is projected to grow 55%, while net profit is expected to rise by over 32% on quarter. In the December quarter, the company reported revenue of nearly INR 58 billion and a net profit of INR 13 billion.
The highest profit estimate of INR 19 billion has been projected by Kotak Institutional Equities and the lowest estimate of nearly INR 12 billion by Nirmal Bang Equities Pvt. Ltd. JM Financial Institutional Securities Pvt. Ltd. has estimated the highest revenue of INR 94 billion for the company and Nirmal Bang the lowest at INR 85 billion. The company will declare its results for the quarter and year ended Mar. 31 on Monday.
Motilal Oswal Financial Services Ltd. in a note said the revenue growth on a high base would be led by execution of the order book. Recently, Bharat Electronics bagged orders such as maintenance of the Akash Missile System, development of Ashwini radars, electronic voting machines, navigation and stabiliser modules for tanks, fire control, and anti-drone systems.
Nirmal Bang said as India aims to achieve a total defence output of INR 3 trillion by 2029, the number of contracts signed by the defence ministry during FY25 reached 193 and the overall contract value exceeded INR 2 trillion. This is the highest ever and nearly double the previous highest figure. Of these, 177 contracts were given to domestic manufacturers totalling INR 1.6 trillion.
However, brokerages warned that Bharat Electronics' new order inflow has been impacted negatively to some extent in FY25. JM Financial said although the order book of INR 711 billion remains strong, the company missed its original target of bagging fresh orders worth INR 250 billion in FY25 by 25%.
Nuvama Wealth Management Ltd. said over the coming 18-24 months, the company has around INR 1 trillion of orders in the pipeline. The order for Quick Reaction Surface-to-Air Missile, valued at INR 250 billion, too could materialise in the next 6-9 months, it said.
Bharat Electronics is expected to report an earnings before interest, tax, depreciation, and amortisation of INR 22 billion in the March quarter, according to the average of estimates by nine brokerages. The highest estimate of INR 25 billion is by Kotak Institutional Equities and the lowest EBITDA of around 15 billion by Nirmal Bang.
Motilal Oswal Financial Services said that EBITDA margins may contract by 340 basis points on year to 23.3%, saying it was mere normalisation of the margins.
On Wednesday, shares of Bharat Electronics closed 2.6% higher at INR 344.35 on the National Stock Exchange.
Following are the Jan-Mar earnings estimates for Bharat Electronics based on reports from 10 brokerages in descending order of the estimate of net profit
|
Broker Name |
Net sales (in million rupees) |
Net profit (in million rupees) |
EBITDA (in million rupees) |
|
Kotak Institutional Equities |
90,799.00 |
19,033.00 |
25,009.00 |
|
Sharekhan Ltd |
89,200.00 |
18,730.00 |
|
|
JM Financial Institutional Securities Pvt Ltd |
93,577.00 |
18,720.00 |
23,785.00 |
|
Nuvama Wealth Management Ltd |
88,391.00 |
18,704.00 |
23,801.00 |
|
Equirus Securities Pvt Ltd |
90,923.00 |
18,394.00 |
23,957.00 |
|
Nomura Equity Research |
89,272.00 |
18,161.00 |
23,251.00 |
|
Motilal Oswal Financial Services Ltd |
88,780.00 |
17,091.00 |
20,654.00 |
|
Prabhudas Lilladher Pvt Ltd |
90,338.00 |
16,841.00 |
21,596.00 |
|
Elara Securities (India) Pvt Ltd |
84,784.00 |
16,578.00 |
21,380.00 |
|
Nirmal Bang Equities Pvt Ltd |
84,784.00 |
11,639.00 |
14,663.00 |
|
Average |
89,084.80 |
17,389.10 |
22,010.67 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Subhojit Sarkar
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