Why Bharat Electronics Share Price is Rising

The government is actively focused on improving the country's defenses.

It's pouring in tons of cash for new fighter jets, warships, and all sorts of military equipment. But here's the catch: they also want to make most of the equipment in India itself, following its "Make in India" initiative.

This is where Bharat Electronics comes in. The company is a major player in Indian defence electronics.

No wonder BEL's stock price is on a record-breaking streak, consistently hitting new 52-week highs. Just today, it reached a new peak of Rs 282.8.

A deeper look reveals its share price has skyrocketed over 148% in the past year. It's up 18% in the last month alone.

Let's dive deeper and explore the reasons behind BEL's meteoric rise, fuelled by India's ambitious defence makeover.

#1 Healthy Financial Performance

For FY24 the total income of the company stood at Rs 209.4 billion (bn) up 17% compared to the last year.

The rise in income was drawn on account of a significant rise in other income by 139%.

The company's net profit for FY24 also witnessed an impressive 34% increase, reaching Rs 39.4 bn.

This jump is a result of both rising revenues and a healthy backlog of orders, ensuring consistent production throughout the year. The company's net profit margin also received a boost, climbing 2.5%.

The board of the company also declared a final dividend of 80% amounting to d dividend of Rs 0.8 per equity share for the financial year 2023-24.

The company has also declared two interim dividends of Rs 0.6 each in February2024 and March 2024, respectively.

#2 Strong Order Book

Bharat Electronics Limited reported a strong year for order acquisition in FY24, securing contracts valued at approximately Rs 350 bn.

These orders included a range of critical defence equipment, such as electronic fuzes, radars, communication systems, fire control systems, sonars, and tactical communication systems.

Notably, the company also achieved diversification with projects in the non-defence sector.

This robust order flow has significantly bolstered the company's order book, which stood at around Rs 760 bn as of 1 April 2024.

Export sales also witnessed impressive growth, registering a 92% increase to approximately US$ 93 million (m) in FY24.

Key export products included transmit and receive modules, advanced stabilization systems, radar and electronic warfare systems, medical electronics, and communication equipment.

Reflecting this positive export momentum, the company's export order book as on 1 April 2024 stood at US$ 407 m, with new export orders valued at US$ 211 m secured during the year.

The company anticipates continued order momentum in the coming financial year, driven by the government's focus on strengthening the defence sector. The order backlog is estimated to be around Rs 73.5 bn.

What Next?

Bharat Electronics is experiencing a period of significant growth, fuelled by a confluence of factors.

One key driver is the Indian government's renewed focus on indigenous defence production through the "Make in India" initiative.

Furthermore, it is also taking steps to broaden its horizons by diversifying into non-defence sectors and increasing its focus on exports. This diversification strategy is crucial for long-term growth and risk mitigation.

Despite the positive outlook, a note of caution is warranted. While its current order book provides strong earnings visibility, the company's future performance will hinge on its ability to secure new contracts beyond the current defence spending boom.

The success of their diversification efforts and their ability to navigate a potentially competitive export market will also be key factors in determining the company's long-term sustainability.

In conclusion, Bharat Electronics is well-positioned to capitalize on the current wave of defence spending in India.

However, for long-term success, the company must leverage its technical expertise and effectively execute its diversification strategy to ensure continued growth and stability beyond the current defence-driven momentum.

How Bharat Electronics Share Price Has Performed Recently

In the past five days, Bharat Electronics share price has rallied more than 20%. In 2024 so far, it is up 48.1%.

The stock surged 92% in the past six months and more than 148% in the last year.

The stock touched its 52-week high of Rs 282.2 on 21 May 2024 and a 52-week low of Rs 107.3 on 24 May 2023.

About Bharat Electronics

Bharat Electronics is a Navratna defence PSU. The company is the dominant supplier of radar, communication, and electronic warfare equipment to the Indian armed forces.

It has a diversified product line, including non-defence products, software, and electronic manufacturing services.

It also exports its products to several countries, including Botswana, Indonesia, Sri Lanka, Russia, the US, and South Africa.

To know more about the company, check out Bharat Electronics fact sheet and quarterly results.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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