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Informist, Wednesday, Jul. 22, 2026

 

By Rajesh Gajra

 

MUMBAI – Bharat Electronics Ltd.'s top line growth for Apr-Jun is likely to remain moderate for a second consecutive quarter due to a sustained slow pace of order execution. Bottom line growth for the quarter, though slightly better than in the trailing quarter, is still likely to be low due to expected moderate revenue growth, higher tax outgo, and higher depreciation expenses.

 

The pace of order execution represents the growth in revenues for Bharat Electronics, a public sector undertaking providing electronics technology solutions mainly to the domestic defence sector. The company typically gets around 90% of its revenue from government orders for the Indian armed forces – air force, navy, and army. The rest comes from domestic non-defence orders and overseas markets.

 

The company's on-year revenue growth for the June quarter is expected to be slightly better than the March quarter, but nowhere close to the growth seen in the September and December quarters. The company's operating margin for the June quarter is seen range bound. The bottom line is expected to track the growth in operating profit and be weighed down by a sharp increase in tax costs and depreciation expenses.

 

Bharat Electronics is expected to report a net profit of INR 10.36 billion, up 7% on year, according to the average of estimates from 11 brokerages. Sequentially, the net profit is seen down 53%. The highest estimate for net profit is INR 11.25 billion from Motilal Oswal Financial Services Ltd. and the lowest is INR 8.95 billion from ICICI Securities Ltd. If the 7.1% on-year net profit growth estimate comes out right, it will be higher than the 4.7% of the trailing quarter, but considerably below the growth rate of nine quarters preceding the March quarter.

 

The company's revenues from operations for the quarter are expected to be INR 50.36 billion, up 14% on year and down 51% on quarter. The highest estimate of revenues is INR 52.87 billion from PhillipCapital (India) Pvt. Ltd. and the lowest is INR 46.62 billion from ICICI Securities. If the estimated 14% growth comes out right, it will be better than the 12% growth in the March quarter, but much lower than 24-26% in the September and December quarters.

 

The company's earnings before interest, tax, depreciation, and amortisation are expected to be INR 13.64 billion for the reporting quarter, according to an average of 10 estimates.

 

The defence orders that the company receives from the government pertain to weapons, electronic warfare, radar and fire control, and communication systems. Bharat Electronics had an outstanding order book of INR 738.82 billion as on Apr. 1. Both Kotak Securities Ltd. and Nomura Equity Research estimate the company's order inflow to be around INR 35 billion for the June quarter, which they said is a decline of 54% on year.

 

The company's management said in May it will most likely book orders for quick reaction surface-to-air missiles in the June quarter. But the orders apparently did not get booked during the quarter. According to Nuvama, "The Indian Army has already floated the tender" for the INR-300-billion quick reaction surface-to-air missile programme, and orders for Bharat Electronics are expected to materialise in the near term.

 

Brokerages expect revenues from the execution of orders to rise between 12% and 20% for the quarter. Nuvama Wealth Management Ltd. expects revenues to increase 12% on year due to "modest execution growth", while PhillipCapital expects a 20% growth on account of a "favourable product mix".

 

The company's EBITDA margin is likely to range from a marginal decline to a marginal increase. Prabhudas Lilladher Pvt. Ltd. expects the company's EBITDA margin to remain flat on year, amid a lower gross margin that is likely to be offset by better operating leverage.

 

The EBITDA margin will be supported by operational efficiencies and increasing localisation, according to Nuvama. On non-operating metrics, Kotak Securities Ltd. expects the tax costs of the company for the quarter to rise 31% on year and weigh on the bottom line performance, while Motilal Oswal expects the depreciation expenses to rise 25%.

 

Bharat Electronics will announce its earnings for the June quarter on Jul. 27. Post-announcement, the key factors to watch will be updates by the company on large orders, including the quick reaction surface-to-air missiles, radars, next-generation corvettes, and submarines, according to Motilal Oswal. The brokerage said the key focus areas for investors will be the "finalisation of orders, execution of the huge backlog, incremental share of exports, and further indigenization of modules and subsystems."

 

Wednesday, shares of Bharat Electronics closed 0.8% lower at INR 406.75 on the National Stock Exchange. The shares are down 4.7% from the date the March quarter earnings were announced.

 

Of the 13 brokerage reports on the company available with Informist, 12 have a "buy" call on the stock at an average target price of INR 490, which is 20% higher than the current market price. One has a "hold" recommendation.

 

Following are the June quarter earnings estimates for Bharat Electronics from 11 brokerages, in descending order of estimate of net profit, in INR million:

Brokerage	Net Sales	Net Profit	EBITDA
Motilal Oswal Financial Services Ltd	51,072	11,247	14,811
PhillipCapital (India) Pvt Ltd	52,873	11,217	14,937
Kotak Securities Ltd	51,501	11,060	14,505
Prabhudas Lilladher Pvt Ltd	49,132	10,773	13,806
Bank of America global research	50,925	10,662	13,676
Nuvama Wealth Management Ltd	49,301	10,627	13,804
Elara Securities (India) Pvt Ltd	52,389	10,149	13,097
Nomura Equity Research	50,000	10,126	13,500
360 ONE Capital Market Pvt. Ltd.	48,393	10,083	---
JM Financial Institutional Securities Pvt Ltd	51,800	9,008	12,007
ICICI Securities Ltd	46,617	8,953	12,237
Average	50,364	10,355	13,638

 

 

End

 

Edited by Shubhayan Bhattacharya

 

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