Highlights from the Quarter (Q1FY21):
Net Sales for Q1FY21 stood at Rs.1,675.59 Cr as against Rs.2,124.50 Cr in Q1FY20 (down by 21.1% YoY) and against Rs.5,816.77 Cr in Q4FY20 (down 71.2% QoQ) due to the impact of Covid-19 induced lockdown, which impacted the company’s operations during the quarter.
EBITDA for the quarter stood at Rs.146.08 Cr as against Rs.355.08 Cr in the corresponding quarter last year (decrease of 58.9% YoY) and against Rs.1,493.96 Cr in the previous quarter (decrease of 90.2% QoQ). The EBITDA margin for Q1FY21 was 28.72% against 16.71% in Q1FY20 (down by 800 bps) and against 25.68% in Q4FY20 (down by 1697 bps). The decline in margin is due to higher costs in this low revenue environment.
Net Income for Q1FY21 was Rs. 53.84 Cr as against Rs.210.65 Cr in Q1FY20 (decrease of 74.4% YoY) and against Rs. 1,046.97 Cr in the previous quarter (decrease of 94.9% QoQ).
The Order book position of the company as on 1 st July stood at Rs. 53,752 Cr
Outlook and Valuation
Bharat Electronics’ performance for Q1FY21 was impacted mainly by the coronavirus pandemic with disruptions in supply chain causing longer procurement periods and low operating leverage. However, looking at the healthy order book and the fact that the last quarter is the strongest for the company, we expect the negative impact to be lower than what other industries are facing. We have factored in a 19% reduction in sales for FY21E, followed by a recovery in FY22E led by stronger execution and improvement in working capital cycle post Covid-19. We maintain our Target Price of Rs.139 with a BUY rating on BEL over a 18-24 month horizon.
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