Bharat Electronics: In the budget plan for the year 2023-24, the government increased the money allocated for defense to ₹5.94 lakh crore. Further, in the interim Union Budget 2024-25 the allocation mentioned was over Rs 6.21 lakh crore
This increase in funding represented a positive outlook for companies like Bharat Electronics Limited (BEL), which creates advanced technology for our defense. BEL is a crucial player in developing advanced electronic systems for our armed forces. The company’s stock gave a stellar return of 578.31% in 5 years. The company’s total outstanding order book as of 31st January 2024 stands at a whopping amount of Rs 76,000 crores.
This article takes a closer look at BEL’s journey, exploring the company’s business, the turnover breakup of the company, order book status, the recent big orders the company received, and future outlook. With this brief outline, let’s go ahead and understand the company’s business and get a complete overview.
Table of Contents
Bharat Electronics Ltd
Business Overview
Bharat Electronics Limited (BEL) is a big player in making electronic gear for India’s defense. It started in 1954 under the Ministry of Defence, and now it’s a top-notch company. The government owns the majority of BEL, holding 51.14% of its shares.
As a leading player in the defense industry, BEL specializes in supplying radar, communication, and electronic warfare equipment to the Indian armed forces. The company boasts a robust presence with nine manufacturing units strategically located across India, along with two dedicated research units. Among these, the Bangalore and Ghaziabad units emerge as pivotal contributors to BEL’s overall financial performance, with the former playing a substantial role in generating the majority of the company’s revenue and profits.
Business Segment: understanding their revenue breakup
BEL operates in two main segments, catering to both defense and non-defense markets:
Defense Segment
BEL creates a wide array of electronics for Indian defense services, produced across nine plants with 25 strategic business units. Their product expertise spans Radar and Fire Control Systems, Weapon Systems, Communication, Electronic Warfare Systems, and more. Recent diversifications include Arms & ammunition, Seekers & Missiles, Network & Cyber Security, and Unmanned Systems.
Non-Defense Segment
In the non-defense arena, BEL develops products for civilian markets, including Homeland Security and Smart City business. A dedicated vertical at the Bengaluru unit focuses on Medical Electronics and Solutions. Their expertise extends to Electronic Voting Machine (EVM) & VVPAT, HS&SC, Software Solutions/Services, Healthcare Solutions, Civil Aviation, Solar Cells/Power Plants, Railway/Metro/Airport Solutions, Space Electronics and Systems, Alternate Energy Solutions, Secure Communication Solutions, and Software.
Bharat Electronics Limited generates the significant majority of its revenues, nearly 90 percent or Rs 15,089 crores, from the defense sector, supplying products and components to the Indian armed forces and defense public sector units.
The non-defense segment contributes 9.3 percent or Rs 1,578 crores to overall revenues. Exports form just 2.3 percent or Rs 395 crores signifying limited but potential overseas opportunity.
Bharat Electronics Ltd – Order book status
The company’s current order book outstanding as of 30th January is Rs 76,000 crores out of which Rs. 28494 Crore is the amount of orders outstanding in the current fiscal year of 2024. With this let’s have a look at the recent big orders of the Bharat Electronics:
CBIC IT Infrastructure Contract
Value: Rs. 665.84 crores plus taxes
Scope: Implementation and management of IT infrastructure
Client: Central Board of Indirect Taxes and Customs (CBIC), Ministry of Finance, Govt of India
Missile Systems Spares Order from Mazagon Dock Shipbuilders Ltd
Value: Rs. 695 Crore
Client: Mazagon Dock Shipbuilders Ltd
Details: Supply of spares related to missile systems.
UP Dial 112 Project Contract
Value: Rs. 445 Crore
Client: Uttar Pradesh Government
Details: Comprehensive hardware, AI-based software tools, and cybersecurity solutions for the next-generation UP Dial 112 project covering the entire state.
Orders from Goa Shipyard Limited and Garden Reach Shipbuilders & Engineers
Value: Rs. 2,673 Crore
Client: Goa Shipyard Limited (Value: Rs. 1701 Crore); Garden Reach Shipbuilders & Engineers (Value: Rs. 972 Crore)
Details: Supply of 14 types of sensors for use on Next Generation Offshore Patrol Vessels (NGOPV)
Indian Army Fuses Supply Contract
Value: Rs. 4522 Crore
Client: Indian Army
Details: Supply of fuses for various calibers.
Additional Orders
- Value: Rs. 339.31 Crore
Details: Pertaining to Combat Management System, Composite Communication System, Transmit/Receive Modules, Mobile Autonomous Stabilization System, and other spares/services. - Value: Rs. 356 Crores
Details: Orders include EW (Electronic Warfare) Testers, Medical Systems (Exports), Consumables and Batteries for Electronic Voting Machines (EVMs), Night Vision Devices Spares, and Services. - Value: Rs. 3,335 Crore
Details: Orders received since September 15, 2023, covering AMC for AEW&C system, Uncooled TI sights, Software Defined Radios, SWIR payload, AMC for IACCS, Passive Night Vision Binoculars, and more.
The company has some very big orders from clients like Mazagon Dock shipbuilders, Goa shipyard, Garden Reach Shipbuilders, UP government, the Ministry of Finance, and some additional orders as well.
The above details highlight only the recent orders. However, the company has more orders piled up for this year. This reflects a robust order book of the company.
Bharat Electronics: Financials
In FY 2022-23, Bharat Electronics recorded a growth of 15.22% with a turnover of Rs 17,333 Crore compared to Rs 15,044 Crore in FY 2021-22. The strong performance of both domestic and export businesses drove the growth, across defense and non-defense segments.
The company’s export sales increased by approximately 45% to USD 48.33 million. They primarily export to countries such as France, the USA, Spain, Israel, Germany, Mauritius, Switzerland, Vietnam, and Sri Lanka.
The Profit after Tax grew by 28% to Rs 3,007 Crore in FY 2022-23 as against Rs 2,349 Crore in FY 2021-22.
| Particular | FY20 | FY21 | FY22 | FY23 |
|---|---|---|---|---|
| Revenue (Rs in Cr) | 12,967 | 14,108 | 15,368 | 17,734 |
| PAT (Rs in Cr) | 1,793 | 2,069 | 2,354 | 2,940 |
| Net Profit Margin (%) | 14 | 15 | 15 | 17 |
| Return On Equity (%) | 19 | 20 | 20 | 22 |
Key points to be noted
Bharat Electronics Limited (BEL) heavily relies on the Indian defense sector, constituting about 87% of its revenue. This high dependence poses vulnerability to shifts in defense policies or significant spending cuts.
To address this, BEL is actively diversifying its revenue sources by increasing non-defense earnings and exploring defense equipment exports to friendly nations. Historically, the company has managed its working capital needs, characterized by high receivables and inventory, through internal cash accruals and customer advances.
As of December 31, 2022, the Government of India holds a significant 51.14% equity stake in Bharat Electronics, underscoring its strategic importance. This ownership not only highlights BEL as a key domestic defense electronics supplier but also provides economies of scale.
Financially, Bharat Electronics maintains a robust profile with healthy profitability, strong returns, and zero borrowings. The company’s superior liquidity and strong debt coverage metrics further solidify its financial strength and stability.
Future Outlook
- Bharat Electronics Limited (BEL) is strategically expanding into non-defense sectors, aiming for about 30% of total turnover. Leveraging its expertise, BEL explores diverse opportunities and innovative business models, such as Government-owned company-operated, and OPEX, to capture new customer segments.
- In FY 2023-24, BEL targets 15-17% growth, driven by both defense and non-defense businesses. The company plans to enhance its global presence by expanding its marketing offices, focusing on Southeast Asia, Europe, the Middle East, Africa, and North and South America.
- BEL envisions INR 50,000 crores worth of orders in the next 2 years and plans a capital expenditure of INR 700-800 crores.
- Additionally, a new strategic business unit for cybersecurity reflects BEL’s commitment to addressing evolving challenges in the digital landscape.
In Closing
Bharat Electronics Limited (BEL) stands at the forefront of India’s defense electronics sector, displaying robust growth, a diverse order book, and a strategic vision for the future. The company’s stellar performance, combined with its focus on diversification, global expansion, and technological advancements, positions BEL as a key player in the evolving defense landscape.
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Written by Akshita Maloo
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