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Shares of Bharat Electronics Limited (BEL) rallied 3 per cent to touch a record high level of Rs 131 per share in Friday's intra-day trade after the company reported 23 per cent year-on-year (YoY) jump in net profit at Rs 530.8 crore in the April-June quarter of fiscal year 2023-24 (Q1FY24).
So far this year (CY23), shares of BEL have soared over 32 per cent, as against a 9 per cent surge in the S&P BSE Sensex.
The state-owned company saw 12.5 per cent YoY revenue growth to Rs 3,446 crore in Q1FY24, whereas total expenses climbed 9.4 per cent YoY to Rs 2,948 crore.
Earnings before interest, tax, depreciation, and amortisation (Ebitda), meanwhile, rose 29.4 per cent YoY to Rs 664.4 crore, while Ebitda margin expanded to 18.9 per cent in the June quarter from 16.5 per cent, in a year-ago period.
As of July 1, 2023, the management said that the order book position stood at Rs 65,356 crore.
Analysts at UBS said that the June quarter performance of BEL was a strong operational beat, with revenue and Ebitda at 6 per cent, and 40 per cent above estimate, respectively.
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"The strong top-line visibility should drive re-rating of the stock," the brokerage firm added in a post-result review analysis.
Those at Prabhudas Lilladher, meanwhile, said that they remain positive on BEL's long-growth story.
"BEL's strong order book and pipeline, diversification in newer business verticals like medical equipment, hydrogen fuel cell, EV batteries, product indigenisation, and focus on export markets will be some of the key triggers," analysts added.
On the other hand, analysts at ICICI Securities believe that BEL is favourably positioned to capture the larger pie of impending huge opportunity in the defence electronics systems or sub-systems or components industry.
"The company’s strategy to diversify into non-defence, focus on increasing exports and services share would aid long term growth and help de-risk its business. We expect revenue, Ebitda to grow at a compounded annual growth rate (CAGR) of 17.7 per cent, 15.5 per cent, respectively, in FY23-25E aided by sustained margins at 22 per cent," the brokerage firm added, maintaining a 'buy' call on the counter, with a target price of Rs 160 per share.
However, analysts underline primary dependence on the ministry of defence, delay in advances from customers, and heavy reliance on foreign supplies for sub-systems could be a roadblock to growth.
