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Buy Bharat Electronics; target of Rs 132

BEL reported earnings which were better than our expectations at Rs541 mn, against our expectations of a loss. Revenues de-grew by 19.7%/71.4% yoy/qoq to Rs16.4 bn, which were above our expectations as the company executed the ventilators order of Rs4 bn in the quarter.

Ex-ventilators, the revenues dropped by 40% yoy. LRSAM, Smart City business, Intelligence Gathering Systems, Thermal Imaging Cameras and Radar repairs were the other revenue contributors in Q1.

Reduction in RM to sales at 49.3% led to gross margin expansion at 50.7%. EBITDA margins came in at 8.8% which were down by 780 bps yoy, but were still better than our expectations of operational loss, on gross margin beat. PAT as a result of this came in at Rs541 mn, which was better than streets estimate.

In Q1, the company delivered 10,000 ventilators for Rs4bn, while has an order of 20,000 ventilators @ Rs8bn to be supplied in Q2. In Q1, the companys order book was increased by Rs34 bn (72% up yoy), which took the total order book up to Rs538 bn (4.2x FY20 sales). Money Control

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