Buy Bharat Electronics; target of Rs 135: ICICI Direct

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ICICI Direct's research report on Bharat Electronics

Bharat Electronics reported a mixed performance during the quarter. During Q1FY20, the company reported revenues of Rs 2102 crore, almost flat growth YoY. EBITDA grew 12.1% YoY. EBITDA margins came in healthy at 16.6% vs. 14.8% YoY due to gross margin expansion of 240 bps YoY and contraction of other operational expenses by 18.3% YoY partly offset by 10.9% YoY increase in employee expense. Overall, PAT grew 13.9% YoY to Rs 204.7 crore, supported by other income jump of 2.8x YoY.

Outlook

Overall, we remain positive on the company and expect it to report topline, EBITDA and PAT CAGR of 14.7%, 5.4%, 1.8%, respectively, over FY19-21E. We value the company at 16x P/E on FY21E earnings to arrive at a target price of Rs 135 per share. We maintain our BUY rating on the stock.

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Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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