Bharat Electronics Limited — Q1 FY26 earnings call

Call held 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

  • 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).

Key financials

  1. Revenue from Operations ₹4,417 Cr +5.2%YoY
  2. Profit Before Tax ₹1,289 Cr +24.3%YoY
  3. Profit After Tax ₹969 Cr +24.9%YoY
  4. EBITDA Margin 29.9%
  5. EPS ₹1.33

What they filed

Q1 FY27: revenue up 25.3%, net profit up 8.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,583 5,756 9,120 4,417 5,764 +26%7,122 +24%10,177 +12%5,533 +25%
EBITDA1,389 1,653 2,789 1,240 1,695 +22%2,118 +28%2,962 +6%1,389 +12%
Net profit1,091 1,316 2,105 969 1,286 +18%1,590 +21%2,203 +5%1,048 +8%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹74,859 Cr

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

Mix 2 contract types
  • Nomination 90%
  • Competitive 10%

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

high confidence
  • Capex ₹1,000 Cr
    • Large expansion in other plants, capital items for new generation test instruments
    Capex figure is INR1,000-plus crores. We are going to have this time INR1,000 crores plus only. It cannot be less than that. That is we are committed this year because we are having large expansion in other plants already are underway and a lot of capital items are required for our new generation test instruments and others.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · High confidence >15%
    Revenue growth more than 15%

    — Manoj Jain

Profitability

  • EBITDA Margin Profitability · FY26 · High confidence >27%
    EBITDA margin more than 27%

    — Manoj Jain

Order Inflow

  • Order Inflow Order Inflow · FY26 · High confidence INR27,000+ crores (excluding QRSAM)
    order inflow of INR27,000-plus crores excluding QRFM. if QRFM comes, which we are still confident for Q4. If it comes, then it will be additional INR30,000 plus crore.

    — Manoj Jain

  • QRSAM Order Finalization Order Inflow · Q4 FY26 · High confidence Order by February-March
    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.

    — Manoj Jain

  • MSR Program Subsystems Order Order Inflow · Q3-Q4 FY26 · High confidence Major portion in Q3 and Q4
    So hoping that also Q3 and Q4, we are expecting a major portion of that.

    — Manoj Jain

  • Project Kusha Order Conversion Order Inflow · next 3-4 years · Medium confidence 3-4 years
    So order conversion is at last time also all, it will take a minimum 3 to 4 years.

    — Manoj Jain

  • Shatrughat and Samaghat EW Systems Order Order Inflow · High confidence INR6,500+ crores
    So, the total order I think for Shatrughat and Samaghat put together will be around INR6,500 crores plus.

    — Manoj Jain

  • LCA Components from HAL Order Inflow · FY26 · High confidence INR1,000+ crores
    Overall, I think, we are planning around, you can assume around INR1,000 plus crores total put together for LCA... And other helicopter programs of HAL.

    — Manoj Jain

  • LCA Mk1A Follow-on Order (97 numbers) Order Inflow · High confidence INR3,000+ crores
    So, you can extrapolate how much it will be -- roughly, it will be around INR3,000 crores, I can say, including escalations, roughly INR3,000 crores plus/minus... So right now, I have excluded EW and Radar from that and only the other sub-electronic subsystems, around 11 to 16 type of subsystems which we are supplying for them. So those subsystems only I told order value of around plus minus, INR3000-plus minus few hundred crores.

    — Manoj Jain

  • Drone Opportunities Order Order Inflow · by year-end · High confidence At least one order
    We are confident by year-end at least one of the order we may get out of these four or five leads before this.

    — Manoj Jain

R&D Investment

  • R&D Investment R&D Investment · FY26 · High confidence INR1,600+ crores
    R&D investment as it was committed, it will be INR1,600-plus crores only.

    — Manoj Jain

Capex

  • Capex Capex · FY26 · High confidence INR1,000+ crores
    Capex, INR1,000-plus crores

    — Manoj Jain

Exports

  • Export Revenue Exports · next 5 years · High confidence 10% of turnover

    From 4-5% today

    And we wanted to reach in next five years around 10% of our turnover through exports.

    — Manoj Jain

Services Business

  • Services Business Contribution to Revenue Services Business · next 2 years · High confidence 13-15%

    From 10-11% today

    So, we are expecting 10%, 11% will become 13% to 15% over a period of time.

    — Manoj Jain

What to watch in Q2 FY26

QRSAM Order Finalization

Q4 FY26 (February-March)
Current DAC approval received, RFP awaited
Target Order 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

  • Geopolitical situation impacting component supply

    medium

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

    Your first point is correct that we only could register 5.19% growth. We were expecting around INR200 plus crores further execution of the order, but last minute because of geopolitical situation, especially in Israel-Iran conflict, that affected our minimum INR200 plus crores of the revenue.

    Management acknowledged

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

    medium

    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.

    And there are I think in both of them, there are two partners. So, we don't know who will become L1 in that. So, we are only bidding, but not confident whether we will get the full order. So maybe for those EW and Radar, there is a 50% probability, I should say.

    Management acknowledged

Q&A highlights

8 direct
Q1 Margin Performance and Drivers Direct
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

Timelines for Large Ticket Order Opportunities (QRSAM, MSR, Kusha) Direct
So QRSAM, as you may be knowing the DAC approval was given on 3rd July 2025. So good progress has happened on that front. So now only the RFP has to be issued to us... We are confident to get this order by February, March as of now also. ...So hoping that also Q3 and Q4, we are expecting a major portion of that [MSR]. ...So order conversion is at last time also all, it will take a minimum 3 to 4 years [Kusha].

Provides crucial timelines for major upcoming orders, offering visibility into future order inflow and revenue recognition.

Asked by Umesh Raut

Impact of Geopolitical Situation on Q1 Revenue and Supply Chain Direct
Your first point is correct that we only could register 5.19% growth. We were expecting around INR200 plus crores further execution of the order, but last minute because of geopolitical situation, especially in Israel-Iran conflict, that affected our minimum INR200 plus crores of the revenue. So, because of that only we could fall short of that. Anyway, quarter two we will compensate for this, I am confident about that.

Clarifies the reason for the lower-than-expected Q1 revenue growth, linking it to external geopolitical factors and management's plan to recover in Q2.

Asked by Amit Anwani

Sustainability of 15%+ Revenue Growth from a Large Base Direct
Certainly, yes. 16% is not at all a challenge. We are actually internally aiming for 17.5% plus. As it was told also last time also, so many projects are in pipeline where we have done good investment at right time. So, two programs are anyway QRSAM and Kusha, which you know, which are definitely INR30,000 crores, INR40,000 plus crores.

Reassures investors about the company's ability to sustain high growth rates despite its increasing size, citing a strong pipeline of large projects.

Asked by Atul Tiwari

BEL's Position in AI/ML and Quantum Technology for Modern Warfare Direct
Let me assure you, we are almost at par with these countries in this new technology domain of AI/ML. We are working closely with our defense forces to see that how this modern warfare can be benefited by this new technology of AI/ML. The main challenge there typically in AI/ML is the data. So, how to get the right data to train ourselves?

Highlights BEL's strategic focus and capabilities in cutting-edge defense technologies, emphasizing self-reliance and collaboration with defense forces.

Asked by Manish Ostwal

Sales Mix and In-house Manufacturing vs. Indigenization Direct
I think last time also we told it is not in-house manufacturing. It is in-house design or indigenization, which as a drive we are doing. Manufacturing, we do based on the case-to-case basis. Typically, we involve our MSME and other partners more and more. Wherever they are available and their quality output is insured, we generally take from them only.

Clarifies BEL's strategy regarding manufacturing, emphasizing indigenization and support for MSMEs rather than solely increasing in-house production, which impacts margins positively.

Asked by Ajinkya Jadhav

LCA Mk1A Follow-on Order Scope and Value Direct
So right now, I have excluded EW and Radar from that and only the other sub-electronic subsystems, around 11 to 16 type of subsystems which we are supplying for them. So those subsystems only I told order value of around plus minus, INR3000-plus minus few hundred crores.

Provides a specific value estimate for BEL's share in the LCA Mk1A follow-on order, while also noting the competitive nature of EW and Radar subsystems.

Asked by Harshit Patel

Order Book Composition: Nomination vs. Competitive Bidding Direct
And regarding nomination and competitive bidding, the ratio is around 90%-plus minus to 10%. 90%-10%, we can say roughly. 90% nomination, 10% competition as of now.

Offers insight into the nature of BEL's order book, indicating a high proportion of nomination-based orders, which provides greater revenue visibility and stability.

Asked by Girish

2 min read 5 chapters

Detailed narrative

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.

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).

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.

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.

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.

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