Dalal Street Investment Journal - July 09, 2019

10 DALAL STREET INVESTMENT JOURNAL I JULY 8 - 21, 2019 DSIJ.in^

B

harat Electronics Ltd. (BEL) is

a Navratna company with 37

per cent market share in Indian

defence electronics. Its core

capabilities lie in the areas of

radar and weapon systems, defence

communication and electronic warfare.

On the standalone quarterly front, the

total income from operations rose 7.65 per

cent YoY to `3,884.64 crore in Q4FY

from `3,608.46 crore in Q4FY18. EBITDA

increased 16.68 per cent YoY to `929.

crore in Q4FY19 from `796.19 crore in

Q4FY18. EBITDA margin improved 190

bps YoY to 23.9 per cent in Q4FY19 from

22.1 per cent in Q4FY18. This is on

account of gross margin expansion of 630

bps YoY. The improvement in gross

margin is attributable to execution of

higher proportion of indigenous orders

during the quarter. Net profit showcased a

growth of 19.67 per cent YoY to

`668.62 crore in Q4FY19 from `558.

crore in Q4FY18. Consequently, EPS

increased by 20.18 per cent YoY to

2.74 in Q4FY19 from2.28 in Q4FY18.

During the quarter, the company's export

Total Income 3884.64 2716.49 3381.41 2102.06 3608.

Other Income 128.79 17.62 14.25 8.88 27.

Operating Profit 1057.82 785.74 868.69 319.37 824.

Interest 11.94 0.00 0.00 0.27 0.

Net Profit 668.62 507.63 571.31 179.73 558.

Equity 243.66 243.66 243.66 243.66 243.

Last Five Quarters (`/Cr)

Mar-19 Dec-18 Sep-18 Jun-18 Mar-

-40.

-30.

-20.

-10.

0.

10.

20.

30.

40.

Jul-18Aug-18Sep-18Oct-18Nov-18Dec-18Jan-19Feb-19Mar-19Apr-19May-19Jun-19Jul-

Monthly Stock Market Returns

`10,400.80 crore in FY18. EBITDA

demonstrated a healthy growth of 42.

per cent YoY to `2,906.23 crore in FY19 as

against `2,035.21 crore in FY18. The

company reported EBITDA margin of

23.9 per cent in FY19 as against 19.6 per

cent in FY18. Net profit soared 31.32 per

cent YoY to `1,848.03 crore in FY19 from

`1,407.25 crore in FY18. As a result, EPS

surged 32.76 per cent YoY to `7.74 in

FY19 from `5.83 in FY18.

The improvement in EBITDA margin is

attributable to execution of high margin

orders and cost rationalisation. Presently,

the company has an order backlog of

`52,000 crore, thereby awarding a healthy

revenue visibility for the next three years.

The order inflows in FY19 rose 133 per

cent YoY to `23,671 crore. These orders

pertain to LRSAM, 'Smart Cities' business,

home land security system, AMC for

radars, naval equipment, upgradation of

fire control systems and setting up of a

weapon repair facility at the Naval

Shipyard. The Akash missile order is likely

to be finalized in FY20. The LRSAM

order, which is still in the initial stages, is

expected to start generating revenues

towards the end of FY20.

BEL maintained a consistent and prudent

focus on receivables throughout FY19.

The benefits of this manifested in the form

of efficient working capital management.

This helped the management refrain from

availing debt. The non-defence segments

like homeland security, cyber security and

Smart Cities have generated an order

book of `1,500 crore. They have the

potential to contribute reasonably to

topline, although with modest margins

over the next few years. By virtue of these

factors, we urge our reader-investors to

BUY this stock.

revenues came in at US$ 21.6 million,

while the export order book stood at US$

116.62 million. In order to enhance the

contribution from this segment, the

company has already set up offices in Sri

Lanka, Myanmar, etc.

The consolidated financial performance

for the full year ended March 31, 2019

stands as follows: Total income from

operations rose 16.95 per cent YoY to

`12,164.17 crore in FY19 from DS

Recommendations Equity

HERE IS WHY

Healthy order inflows

Rising exports

Efficient working capital management

Shareholding Pattern

as of Mar. 2019

Promoters 58.

Public 47.

Others --

Total 100

Balkrishna Ind. 1079.8 1317.85 22.05 417.

Tata Metaliks 667.8 826.2 37.93 89.

Colgate-Palmolive (I) 1051.65 1231 17.5 77.

PFC 122.6 147.6 20.39 64.

Symphony 1429.8 1672 16.94 64.

Name of

Company

Absolute

Gains

(%)

Best of LAST ONE Year

Exit/CMP

Price (`)

Reco

Price

(`)

Annual

Returns

(%)

BSE Code: 500049

CMP: `113.05 FV: ` 1

BSE Volume: 378,

Date: 03 /07/

LIGHT UP YOUR PORTFOLIO WITH BEL

Bharat Electronics Ltd.

Note: The stocks recommended under this section are fundamentally strong stocks. However investors are advised to wait for the correct opportunity

to enter these stocks considering the market sentiment right now.