Buy Bharat Electronics Ltd For Target Rs. 285 by Motilal Oswal Financial Services Ltd
* We expect revenue growth of 4% YoY due to the already high base. Revenue growth would be led by careful execution of the order book of INR717b.
* Key monitorables include the status of QRSAM/MRSAM, execution of orders for LRSAM and EW projects, share of exports, and working capital cycle.
* We expect margins to normalize after a spike in the past two consecutive quarters and contract ~340bp YoY, reaching 23.3%. Margins in BHE are a function of the project mix and can vary sharply during a quarter.
* Further indigenization of modules, subsystems, etc. is expected to support BEL in future margin expansion.
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