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Strong Q1; Order Inflows remain key monitorable

We revise our FY28E EPS estimate +3.8%, factoring in sustained order inflows across key segments supported by strong order prospects. BEML reported strong revenue growth of 29.3% YoY, while EBITDA margin expanded by 801bps YoY to 0.2%, resulting in positive EBITDA. Revenue growth was driven by a sharp turnaround in Railways (+178% YoY) and healthy Defence execution (+25% YoY), partly offset by lower Mining revenue (-14% YoY) due to order deferments. The closing order book remained robust at ~Rs163bn (3.6x TTM revenue), with Railways contributing ~65%, Defence ~25%, Exports ~6% and Mining ~4%. The management highlighted ~Rs400bn of order prospects, with a 30–40% success rate supporting their ~Rs200bn FY27 order inflow target, led by Rail & Metro (65–70%) on the back of multiple high-speed rail and metro tenders expected to be awarded in H2 FY27, Defence (~20%) supported by a sizeable pipeline across platforms, Mining (5–6%) through being L1 in ~Rs9bn orders and incremental tenders worth Rs5-6bn, and Exports (~5%) driven by opportunities in HEMM, rolling stock and participation in major tenders in West Asia. Execution capabilities are being strengthened through the commercialisation of high speed rail complex Aditya (Bengaluru) and potential Rs9bn capex at Brahma (Bhopal) while upcoming facilities in Mysore and Bilaspur will cater to aerospace and wheeled mining equipment respectively with capex yet to be finalised. Expansion into Tunnel Boring Machines, Ship to Shore Cranes and AMCA programme is being planned with HAL LCH fuselage order (Rs1.84bn) opening up further avenues. While the opportunity pipeline remains healthy, timely order finalisation, execution ramp-up and conversion of the bidding pipeline into orders remain key monitorable. The stock is currently trading at 35.6x/25.7x FY27E/FY28E earnings. We maintain our ‘Accumulate’ rating with a revised TP of Rs2,011 (Rs1,940 earlier), at PE multiple of 27x Mar’28E (same as earlier)

Long term View:

BEML’s long-term prospects remain strong on the back of

1) healthy order prospects in the modernization of defense vehicles

2) expansion into higher value defense segments such as engines and aerospace

3) large tender pipeline for rail & metro rolling stock

4) large capacity expansion leading to a ramp-up in execution and, thereby, margins.

Strong operating performance reduces loss:

Consolidated revenue increased by 29.3% YoY to Rs8.2bn (PLe: Rs7.2bn) driven by healthy execution on a higher opening order book. Gross margin contracted by 456bps YoY to 44.3% (PLe: 48.4%). At EBITDA level, company reported a profit of Rs20mn vs loss of Rs493mn in Q1FY26 (PLe: loss of Rs380mn). EBITDA margin expanded by 801bps YoY to 0.2% (PLe: -5.3%) aided by operating leverage. At Adj. PBT level, company reported a loss of Rs337mn vs loss of Rs703mn in Q1FY26 (Ple: loss of Rs620mn) driven by increase in finance cost (+41.4% YoY to Rs139mn) and a sharp decline in other income (- 81.7% YoY to Rs16mn). At Adj. PAT level, company reported a loss of Rs270mn vs loss of Rs641mn in Q1FY26 (PLe: loss of Rs470mn) given a higher effective tax rate (19.9% vs. 8.8% in Q1FY26)

Q1FY27 order book stood at Rs163bn (3.6x of TTM revenue):

Q1FY27’s order intake stood at Rs11.8bn; an increase of 171.5% YoY. Order book increased by 12.9% YoY and stood at Rs163bn (3.6x of TTM revenue).

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