Investors in Bharat Electronics Ltd (BEL) stock are tracking whether it will meet its FY25 order inflow guidance of ₹25,000 crore. Last week, the public sector defence company said it secured additional orders worth ₹577 crore, bringing the total order inflows in FY25 so far to nearly ₹14,000 crore.
While announcing the December quarter (Q3FY25) earnings, BEL’s management retained its order inflow guidance for the financial year even as the momentum had been rather muted until then. “Many projects are in the pipeline, which we are hopeful to get in the next two months,” the management said in the Q3 earnings call on 30 January, when the order inflow was around ₹11,000 crore.
“It has a track record of delivering on its plans, as seen in FY23. BEL has met/beaten its result expectations, but subdued ordering has weighed on the stock apart from sector de-rating,” said Jefferies India analysts on 7 March.
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BEL’s shares are now about 19% below their peak of ₹340.50 apiece on 10 July. The stock trades at 36 times FY26 estimated earnings, as per Bloomberg consensus. Jefferies believes order announcements in March-April are a key near-term trigger.
Yet, BEL does face a risk of some orders spilling over to FY26. As such, BEL aims to post sharp order inflow growth in FY26 with multiple big-ticket orders slated to be awarded within the next 12 months. Recall that BEL had a record order inflow of ₹35,000 crore in FY24 aided by some big-ticket orders awarded.
Big orders next year
For FY26, the company expects to receive two big-ticket orders, QRSAM (quick reaction surface-to-air missile) for the air force and MRSAM (medium-range surface-to-air missile) for the next-generation warships for the navy. The two orders are collectively worth over ₹40,000 crore to be executed over 4-5 years. The management said all the negotiations have been completed and the orders are in the contract finalization stage. These orders would also have a higher level of localization with the government’s thrust on defence indigenization, although BEL may have to pass on most of the cost savings to the buyers.
The company is also expanding its product portfolio for the domestic non-defence and export markets, which will reduce its dependence on lumpy defence orders. This includes developing a prototype for Kavach, an anti-collision system for trains, expected to be installed by July. After testing and certification by the railways, the prototype would make BEL eligible to bid for these orders.
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Besides, the recent global realignment with the European Union’s (EU) plan to increase its defence spending to $850 billion, following the suspension of US military aid, bodes well. “We believe defence companies in India stand to benefit as the EU defence original equipment manufacturers turn to public and private defence firms to procure components and subsystems,” says a 6 March Elara Securities (India) report. Here, BEL would be among the key beneficiaries. The company targets raising the share of non-defence and exports to 20% in the medium term from 11% currently.
To be sure, BEL execution momentum is intact. Consolidated revenue growth for 9MFY25 was 25% year-on-year. Ebitda margin at 27.5% is up 390 bps (basis points) year-on-year. The management should be able to surpass its guidance of 15% growth and 23-25% Ebitda margin guidance for FY25. BEL’s order backlog at the 9MFY25-end was ₹71,000 crore (down from ₹76,000 crore at FY24-end) and at over 3x trailing twelve months’ revenue provides strong revenue visibility.