ICICI Direct recommended hold rating on Bharat Electronics with a target price of Rs 100 in its research report dated July 01, 2020.
ICICI Direct's research report on Bharat Electronics
Bharat Electronics (BEL) reported revenues at Rs 5806 crore, up 49.5% YoY, above our estimate of Rs 5671 crore led by decent execution and spillover of few projects from Q3FY20 to Q4FY20. Absolute EBITDA for the quarter was at Rs 1482.6 crore, up 59.6% YoY. EBITDA margin improved ~160 bps YoY to 25.5% owing to decent execution and reduction in other expenses. Overall, PAT grew 54.7% YoY to Rs 1034.5 crore, aided by better execution and lower effective tax rate despite other income decline of 78% to Rs 28 crore on a YoY basis. Major contributors to the FY20 topline were smart city & homeland security business, thermal imaging cameras, integrated air command and control systems, radar systems and part supply of long range surface to air missile system (LRSAM), etc
Outlook
We value BEL at 13.5x P/E on FY22E EPS to arrive at a revised target price of Rs 100 and change our rating from BUY to HOLD. Any disappointment on execution front may significantly impact operating performance of BEL.
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