Bharat Electronics said that the credit rating agency ICRA has reaffirmed the company's long-term rating at '[ICRA] AAA' with stable 'outlook'.
The agency has also affirmed the companys short term rating at ICRA] A1+.
ICRA said that the reaffirmation draws comfort from Bharat Electronics' (BEL's) strategic position as a dominant supplier of electronic equipment to the Indian defence forces.
BEL is majority owned by the Government of India (GOI) and is a Navratna defencepublic sector undertaking (DPSU), which leads to a sizeable inflow of orders on a nomination basis.
The ratings also consider the strong order pipeline with unexecuted order book worth Rs. 76,217 crore as on January 1, 2024. This translates into a trailing order-book-to-operating-income ratio of ~3.8 times (based on FY2024 expected operating income), providing adequate revenue visibility in the medium term.
Moreover, BELs pipeline of fresh orders remains healthy, supported by the Governments growing capital budget allocation and continued focus on rolling out reforms to increase Indias defence product manufacturing capability and gradually reduce imports. Additionally, large defence offset requirements of foreign suppliers also provide opportunities for business growth over the medium term.
Though competition from the private sector is likely to intensify in the medium-to-long term, BELs established track record and large manufacturing capacities with adequate pool of trained manpower and focus on research and development (R&D) will continueto be strong mitigating factors.
BEL has a strong financial profile, characterised by healthy profit marginsand return indicators, nil borrowings and a superior liquidity profile. These strengths are offset to some extent by BELs continued high dependence on the defence sector, which contributes the bulk to its revenues.
Bharat Electronics caters cater to the electronic equipment requirements of the defence sector. The GOI remains BEL's largest shareholder with the current shareholding of 51.14%. BEL was conferred the Navratna PSU status in June 2007. It is the dominant supplier of radar, communication and electronic warfare equipment to the Indian armed forces.
The scrip added 0.95% to currently trade at Rs 190.40 on the BSE.
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