Release Date: July 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bharat Electronics Ltd (BOM:500049, Financial) reported a turnover of INR4,105 crores for Q1 FY25, marking a 19.1% increase from the previous year.
- Profit before tax increased by 47.40% to INR1,037 crores compared to INR704 crores last year.
- Profit after tax rose by 46.21% to INR776.14 crores from INR530.84 crores in the previous year.
- EBITDA margin improved to 22.82% from 19.28% last year.
- The company has a robust order book position of INR76,705 crores as of July 1, 2024.
Negative Points
- Despite strong Q1 performance, the company maintains a conservative revenue growth guidance of 15% for the full year.
- Other expenses grew by about 30% year-on-year, partly due to increased provisions.
- Provision for liquidated damages (LD) increased significantly to INR132 crores from INR54 crores in the previous year.
- Gross margin guidance is set at 40% to 42%, lower than the current quarter's margin.
- The company faces challenges in component-level indigenization, which is progressing slowly and may take 5 to 10 years to achieve substantial results.
Q & A Highlights
Q: What is the revenue guidance for the full year given the strong Q1 performance?
A: We would like to maintain the guidance of 15% revenue growth for the full year.
Q: Can you provide an update on the order flow guidance and key contracts executed this quarter?
A: We will retain the order flow guidance of INR25,000 crores. Major orders received include BMP-2 upgrade, TR modules for Thales, NPR radar, Akash AMC, T-90 stabilizer spares, and CMS system, totaling around INR4,800 crores.
Q: What is the status of the Advanced Land Navigation System (ALNS) and its potential order size?
A: The ALNS Mark-II, which includes NavIC support, is being developed. The potential order size could be between INR500 crores to INR1,000 crores, but exact figures will be confirmed once the Ministry of Defence finalizes the details.
Q: What is the expected timeline for the Quick Reaction Surface-to-Air Missile (QRSAM) order?
A: All trials and paperwork are complete. We expect the order, valued at over INR25,000 crores, to be placed between April to June next year.
Q: Can you provide details on the gross margin and EBITDA margin guidance?
A: The gross margin is expected to be in the range of 40% to 42%, and the EBITDA margin is guided to be between 23% to 25%.
Q: What are the major orders expected in the next one to two years?
A: Major orders expected include ADFCR-ATULYA, EW suit for Mi-17V5, security and surveillance systems for the army, mountain radar, NFR-X radar for ships, and GBMES system, each valued between INR1,000 crores to INR2,500 crores.
Q: What is the current proportion of services and goods in the business mix?
A: Services account for around 11% and goods for 89% of the business mix.
Q: What is the status of the Sukhoi-30 upgrades and BEL's involvement?
A: BEL is involved in supplying various subsystems, including radar and EW systems, for the Su-30 upgrade. The expected order value for BEL is around INR4,000 crores to INR5,000 crores for the first batch of 84 to 100 aircraft.
Q: What is the progress on the NETRA airborne warning systems?
A: BEL is maintaining the current NETRA platforms and is involved in discussions for indigenizing various subsystems, including radars, EW, and communication systems, for future orders.
Q: What is the CapEx plan for FY25 and the areas of investment?
A: The CapEx plan for FY25 is around INR800 crores, which includes new factories in Palasamudram, Nimmaluru, Hyderabad, and Nagpur, as well as capital equipment for production purposes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
