InvestorQ : What explains the outperformance of Bharat Electronics Ltd?
Mitali Bhutta made post

What explains the outperformance of Bharat Electronics Ltd?

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4 weeks ago
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Bharat Electronics has been on a roll and for all the right reasons. It soared 6.2% on Monday and scaled a 52-week high of Rs261 on NSE. It currently enjoys an order book position of 3.3 times the annual sales. The recently announced numbers for Q1FY23 was much better than the most optimistic expectations. For instance, standalone revenues were up 90.4% yoy at Rs3,113 crore, which could be partially attributed to the base effect. But, the order book and the pace of execution have been compelling stories for the stock.

BEL has a lot more going in its favour. EBITDA margins expanded by 1260 basis points to 16.5%, although one can remonstrate that sequential EBITDA margins were lower due to negative operating leverage. Its order book at Rs55,333 crore 3.3 times the annual sales. BEL is also likely to gain from an increase in defence spending and robust pipeline of orders. It is likely to get orders worth Rs110,000 crore over the next five years. But what is most appealing to investors is that BEL is diversifying and de-risking model out of pure defence.

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