Bharat Electronics stock hits new 52-week high on strong Q1 execution

Standalone revenue jumped 90.4% year-on-year (YoY) 3,112.8 crore in Q1, helped by a low base from the previous year, when operations were hit as there was a second wave of the coronavirus pandemic. Nevertheless, strong execution was a key factor driving growth in the June quarter.

Analysts at Edelweiss Securities said in a report on 17, “After three-year high single-digit growth, Bharat Electronics is poised to achieve double-digit top-line growth for FY23E, as Q1 beat , combines in comfort by a wide margin.” july.

On the profitability front, gross margin made a recovery after bottoming out in Q3FY22. The measure stood at 41.9% in Q1FY23, up from 41.8% in Q4FY22. Gross margin expanded 30 basis points year-on-year. One basis point is one hundredth of a percentile. Ebitda (earnings before interest, taxes, depreciation and amortization) margin rose 12.6 percentage points to 16.5%, helped by a lower basis. However, sequentially, EBITDA margin declined by 830 basis points due to negative operating leverage.

Order inflows also remained sluggish in the previous quarter along with the order book as on June 30 55,333 crore, from the bottom 57,570 crore till March end.

“But given the underlying trend in defense spending and orders for projects in the pipeline, we do not see a risk to Bharat Electronics. 1.1 trillion defense orders over the next 5 years,” said analysts at ICICI Securities in a report on July 17.

That said, investors would do well to closely track the position of the chip shortage as it poses a major headwind to order execution. Additionally, a lower-than-expected increase in the defense capital budget would pose a risk to the operations of Bharat Electronics. But analysts at ICICI Securities believe it is less likely, given the rising perception of external threat.

first article