Target: ₹120

CMP: ₹

Until end-Q3FY23, Bharat Electronics had secured an order inflow of ₹3,500 crore vs its FY23 guidance of ₹20,000 crore. Our ask rate for Q4-FY23 exceeded ₹16,500 crore, and was at risk of spilling over to next year. However, the management reiterated its guidance and mentioned that projects worth ₹12,000 crore have already been cleared by the Contract Negotiation Committee (CNC) and that there are additional bids worth ₹3,500 crore that have been submitted. While order inflows can still spill over, we believe they should fructify early next year.

The company reiterated its FY23 revenue growth guidance of 15 per cent y-o-y. It also guided for strong revenue growth of 20 per cent over FY24-25. It is counting on defence as well as the civil segment to drive growth next year. It has a strong order book of over ₹50,000 crore (OB/revenue of 2.9x as of end-Q3-FY23) and a strong order pipeline.

The management allayed concerns of slowdown in order inflows, which should be well received by investors, in our view.. We forecast Bharat Electronics to deliver revenue and adjusted PAT CAGRs of 12 per cent and 16 per cent, respectively, over FY22-25.

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