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    Bharat Electronics Limited

    BEL
    Capital Goods·30 Jul 2025
    Management Summary

    Bharat Electronics reported a strong Q1 FY26 with robust profit and margin growth, despite a modest 5.19% revenue increase attributed to geopolitical supply chain disruptions. The company maintains a healthy order book of over ₹74,859 crores and reiterated its full-year guidance for revenue, margins, and order inflow, driven by key defense programs and strategic investments in R&D and capacity expansion. Management expressed confidence in compensating for the Q1 revenue shortfall in subsequent quarters.

    Highlights

    7

    • Revenue from operations increased to ₹4,417 crores, up 5.19% YoY.

    • Profit before tax grew by 24.28% to ₹1,289 crores.

    • Profit after tax rose 24.87% to ₹969 crores.

    • EBITDA margin expanded significantly to 29.86% from 22.82% in Q1 FY25.

    • Earnings per share increased to ₹1.33 from ₹1.06 YoY.

    • Order book stood at ₹74,859 crores as of July 1, 2025, with an additional ₹2,600 crores received post-July 1.

    • FY26 guidance maintained for revenue growth (>15%), EBITDA margin (>27%), and order inflow (>₹27,000 crores excluding QRSAM).

    What Changed3

    vs Q2 FY26

    Guidance items6 → 14 (+8)Risks discussed5 → 2 (-3)Q&A highlights3 → 8 (+5)

    Key financials

    Single quarter

    05 metrics
    1. 01Revenue from Operations₹4,417 Cr+5.2%YoY
    2. 02Profit Before Tax₹1,289 Cr+24.3%YoY
    3. 03Profit After Tax₹969 Cr+24.9%YoY
    4. 04EBITDA Margin29.9%
    5. 05EPS₹1.33

    Order Book

    high confidence

    Total Value

    ₹ 74,859 crores

    as of 2025-07-01

    quantified

    Execution

    Majority of current order book executable within 3 years, with ~₹14,000 crores extending beyond 3 years.

    Composition

    Mix2 contract types
    • Nomination90.0%
    • Competitive10.0%

    Share of order book by contract type

    Pipeline

    qualified rfp

    Additional orders of ~₹2,600 crores received after July 1. QRSAM DAC approval received, RFP awaited. MSR program subsystems expected Q3-Q4 FY26. Shatrughat/Samaghat EW systems RFP for Samaghat received, total order ~₹6,500+ crores. Drone opportunities (Archer UAV, loitering ammunition, logistic drone, male variety) with one order expected by year-end.

    "Management is confident in achieving the order inflow target for FY26, with significant orders in the pipeline, including QRSAM and MSR program subsystems. Geopolitical situations caused a minor revenue shortfall in Q1, which is expected to be compensated in Q2."

    Source:
    Prepared remarks
    Q&A

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Capex

    ₹1,000 crores

    Guidance & targets

    14
    CategoryTargetPriority
    Revenue
    Revenue Growth
    >15%
    		High
    Profitability
    EBITDA Margin
    >27%
    		High
    Order Inflow
    Order Inflow
    INR27,000+ crores (excluding QRSAM)
    		High
    Order Inflow
    QRSAM Order Finalization
    Order by February-March
    		High
    Order Inflow
    MSR Program Subsystems Order
    Major portion in Q3 and Q4
    		High
    Order Inflow
    Project Kusha Order Conversion
    3-4 years
    		Medium
    Order Inflow
    Shatrughat and Samaghat EW Systems Order
    INR6,500+ crores
    		High
    Order Inflow
    LCA Components from HAL
    INR1,000+ crores
    		High
    Order Inflow
    LCA Mk1A Follow-on Order (97 numbers)
    INR3,000+ crores
    		High
    Order Inflow
    Drone Opportunities Order
    At least one order
    		High
    R&D Investment
    R&D Investment
    INR1,600+ crores
    		High
    Capex
    Capex
    INR1,000+ crores
    		High
    Exports
    Export Revenue
    10% of turnover
    		High
    Services Business
    Services Business Contribution to Revenue
    13-15%
    		High

    What to watch in Q2 FY26

    5

    QRSAM Order Finalization

    Q4 FY26 (February-March)
    CurrentDAC approval received, RFP awaited
    TargetOrder received

    Why it matters

    A major order (₹30,000-40,000 crores) crucial for future revenue growth and order book expansion.

    We are confident to get this order by February, March as of now also. It may not slip to Q1 of next year. We are confident we may get in the Q4 of this year itself QRSAM because the progress looks really good for us and DAC approval already has come.

    Risks & concerns

    2
    RiskSeverity

    Geopolitical situation impacting component supply

    Geopolitical situation, specifically Israel-Iran conflict, affected critical component supply, leading to a ~₹200 crore revenue shortfall in Q1 FY26. — Management acknowledged

    medium

    Competition for EW and Radar subsystems in LCA Mk1A follow-on order

    For EW and Radar subsystems in the LCA Mk1A follow-on order, there is a 50% probability of BEL securing the order due to competition. — Management acknowledged

    medium

    Q&A highlights

    8

    “As regards to gross margins, gross margins were better in the first quarter in the composition of products, which was more in house manufacturing were there. So it was gross margins were better in the first quarter. As you rightly said it is due to composition of product mix..”

    Explains the significant EBITDA margin expansion in Q1 FY26, attributing it to a favorable product mix with more in-house manufacturing.

    asked by Umesh Raut

    2 min read5 chapters

    Detailed Narrative

    01

    Q1 FY26 Financial Performance Overview

    Bharat Electronics reported a revenue from operations of ₹4,417 crores in Q1 FY26, marking a 5.19% increase from ₹4,199 crores in Q1 FY25. Profit before tax saw a substantial rise of 24.28% to ₹1,289 crores, and profit after tax grew by 24.87% to ₹969 crores. The EBITDA margin significantly improved to 29.86% in Q1 FY26 from 22.82% in the previous year, primarily driven by a favorable product mix with more in-house manufacturing. Earnings per share also increased to ₹1.33 from ₹1.06 YoY.

    02

    Order Book and Pipeline Visibility

    As of July 1, 2025, BEL's order book stood at a robust ₹74,859 crores, with an additional ₹2,600 crores in orders received post-July 1. Key programs contributing to the order book include LRSAM (~₹5,000+ crores), Fuses (~₹4,500+ crores), Akash Army (~₹3,000 crores), BMP upgrade (~₹3,000 crores), Ashwini/Arudhra radar (~₹2,500 crores), and Shakti EW system (~₹2,000 crores). The company anticipates major order inflows from QRSAM (expected by Q4 FY26), MSR program subsystems (Q3-Q4 FY26), and Shatrughat/Samaghat EW systems (~₹6,500+ crores total).

    03

    Strategic Growth Initiatives and Future Outlook

    BEL maintains its FY26 guidance for revenue growth of over 15% (with an internal aim of 17.5%+) and an EBITDA margin exceeding 27%. The company targets an order inflow of over ₹27,000 crores, potentially increasing by ₹30,000 crores if the QRSAM order materializes. R&D investment is planned at over ₹1,600 crores (6-7% of turnover), and Capex is projected to be over ₹1,000 crores for FY26. BEL aims to increase its export contribution to 10% of turnover within the next five years and grow its services business to 13-15% of total revenue in the next two years.

    04

    Impact of Geopolitical Factors and Supply Chain

    The company's Q1 FY26 revenue growth was impacted by approximately ₹200 crores due to geopolitical situations, specifically the Israel-Iran conflict, which affected the supply of critical components. Management expressed confidence in compensating for this shortfall in Q2. The ban on rare earth magnets is not directly affecting BEL, as its primary impact is on the EV and automotive sectors. BEL's focus on in-house design and indigenization, while involving MSME partners for manufacturing, helps mitigate supply chain risks and contributes to margin improvement.

    05

    Advancements in AI/ML, Quantum Technology, and Drones

    BEL is actively pursuing cutting-edge technologies like AI/ML and quantum technology for modern warfare, claiming to be at par with global leaders. The company is collaborating closely with defense forces, has established AI incubation centers, and is confident in delivering advanced solutions without foreign support. In the drone segment, BEL is working on four to five major leads, including the Archer UAV, loitering ammunition, and logistic drones, with at least one order expected by year-end.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.