Sunday, May 03, 2009



Bharat Electronics (BEL)CMP Rs 955
Result Update first:-

BEL’s Q4FY2009 net sales increased by 19.3% year on year (yoy) to Rs2,735 crore, accounting for nearly 60% of the FY2009 net sales. Adjusted profit after tax (PAT) of Rs559.4 crore implied a growth of 15.7% in Q4FY2009 on a year-on-year (y-o-y) basis. Operating Profit Margin (OPM) declined to 30.2% from 31.3% (in last year 4th Quarter) on the back of higher raw material costs.

BEL’s net sales grew by 12.5% yoy to Rs4,733.7 crore in FY2009 while its operating profit increased by 6.4% yoy Rs1,157.7 crore during the year. Despite a 6.4% growth in the operating profit, the company witnessed a flat growth in its adjusted PAT to Rs815.3 crore in FY2009 as the higher operating profit was offset by the increase in the interest and depreciation expenses and the lower other income.

Order Book as on 1st April 2009 is projected to be around Rs 10,000 Crore, gives revenue visibility of next 2 years.

Signing of important MoUs:- BEL has signed an MoU with BHEL to explore formation of a joint venture company for Solar Photo voltaic business. The JVC, besides export, will cater to Indian solar products requirements. A capacity of 250 MW is being envisaged to achieve economies of scale. Other MoU include - one with Boeing to jointly develop an analysis and experimentation centre in India, MoU with SELEX Galileo and Astra Microwave Products to explore opportunities in Electronic Warfare and for design and manufacture of Microwave components & assemblies, respectively. BEL has been selected by Northrop Grumman for the manufacture of F-16 Radar components. Just recently, BEL has finalized a JV with French Company Thales to jointly produce radars. The negotiations for the same are complete and agreement is likely to be signed in a month or two.

BEL is a cash rich company with cash and bank balance at Rs 2461 Cr (FY08). It is a debt-free company giving extra cushion in recessionary conditions. The stock trades at Rs 955 which is around 9.3 times its FY09 EPS of Rs 102.

Future plans:-
BEL aims to do a business turnover of Rs 5,200 crore during the year 2009-10, a growth of 12.7 per cent over the last year. The company is looking at new growth opportunities in areas aligned with BEL’s core strengths through both organic and inorganic growth. BEL chairman and managing director, V V R Sastry, said the company was looking at reducing its dependency on defence contracts to 70% from the present 80-85% in the next two to three years. “The new focus areas for us are homeland security, railways, ports, airports, e-governance, nuclear power instrumentation and energy efficient solutions. We are discussing with reputed foreign and Indian players for forming Indian joint ventures in the areas of defence electronics, namely missile electronics and guidance systems, microwave super components, electro optics, airborne electronic warfare among others,” he said.

Technical Outlook:-

BHARAT ELECTRONICS (BEL) CMP Rs 955 looks is in an up-channel and can target Rs 1080-1100 in short-term. Buy with Stop Below Rs 900.

1 comment:

Titu said...

Dear Sir,
I respect you and Mr. A K Prabhakar a Lot, Y'day I read your blog post about bbl and market really went up above 12k, but still I want to ask you a quesion " is this time to buy? are you bullish on market ? will it go up from here ? if i want to invest should i wait for some time"
please guide.....
your fantastic 15 was gr8 and because of that perfromance i need your guidence,
from my view it is a speculation rally it will fall, so i book profit y'day, but please let me know your view
thanks in advance..