Shares of Bharat Electronics Ltd. jumped to a record high after the company beat analysts’ estimates in the first quarter and on hopes of a better operating margin as order execution is seen to pick up.
Q1 FY23 (Standalone, YoY)
- Net profit at Rs 431.49 crore versus Rs 11.15 crore (Bloomberg consensus estimate: Rs 210 crore).
- Revenue up 90% at Rs 3,112.78 crore (Estimate: Rs 2,110 crore).
- Ebitda at Rs 513.47 crore against Rs 62.86 crore.
- Ebitda margin at 16.50% compared with 3.85%.
- The company recommended a final dividend of 150% (Rs 1.50 apiece of Re 1 each) for FY22 in its board meeting on May 23.
- Order book as on July 1 stood at Rs 55,333 crore.
The stock rose over 6%, the most in more than three months in intraday, to a record Rs 256.1 apiece. The stock closed with 3.65% gains. The trading volume was 7.6 times the 30-day average, when markets closed.
Of the 29 analysts tracking the company, 26 maintain a ‘buy’, two suggest a ‘hold’ and one recommend a ‘sell’, according to Bloomberg data. The 12-month consensus price target implies an upside of 8%.
Since the announcement of Q1 results on July 16, ICICI Securities, Edelweiss Capital and Antique Stock Broking reiterated their ‘buy’ calls, while Morgan Stanley maintained ‘overweight/in line’.
- Reiterates ‘buy’ with a target price of Rs 300 apiece, an implied upside of 22.20%.
- The gross margin had bottomed out in Q3 FY22 and has been in recovery mode since then.
- Underlying trend in defence spending is likely to aid orders over the next five years
- Expects pickup in execution to aid Ebitda margin.
- Identifies the firm as one of the top picks in defence sector, along with HAL.
- Expects near-term risks to revenue due to chip shortages.
- Sees prospects of large export order for the company.
- Reiterates ‘overweight’ with a target price at Rs 260, an implied upside of 5.91%.
- The company beat consensus estimate on consolidated revenue and adjusted PAT by 18% and 44%; order book up 4%.
- Assigns a higher weight to its bull case than the bear case to account for strong ordering.
- Post Q1, there are likely to be upside risks to FY23E.