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JMFL
Bharat
Electronics (Buy)
CMP: ₹181.60
Target: ₹220
Bharat Electronics Ltd is engaged in design, manufacture and supply of electronics products/systems for the defence requirements, as well as for non-defence markets.
Bharat Electronics (BEL) conducted an analyst meet on September 20 and the key takeaways are as follows:
a) management guides for revenue of ₹10,000 crore+ in FY18, while delivery of VVPAT (voter-verified paper audit trail) orders may result in further upside;
b) its robust order pipeline indicates inflows will sustain at ₹15,000-17,000 crore a year over FY18-19;
c) annual capex will continue to remain high as the company looks to spend ₹2,500 crore over FY18-FY20;
d) operating margins will face downward pressure due to the higher share of civilian/ systems integration orders as well as the implementation of the 7th Pay Commission’s recommendations; and
e) BEL will step up R&D to 10 per cent of sales to maintain its edge over competitors.
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