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Informist, Saturday, Oct. 25, 2025

 

By Rajesh Gajra

 

NEW DELHI - The operating profit margin of aerospace and defence electronics company Bharat Electronics Ltd. is expected to fall year-on-year due to an unfavourable product mix in the September quarter, even as order execution is expected to remain strong, leading to stable revenue growth. Analysts' expectations of operating profit growth on year vary, with some expecting it to grow in high single digits, while others see growth in low single digit or even a fall.

 

Analysts foresee a contraction in the state-owned company's operating margin. The company is expected to report a strong on-year increase in order inflows. The government holds 51.1% stake in Bharat Electronics. The company develops electronics technology solutions for the defence and civilian segments, and gets 90% of its revenue from government orders for the Indian armed forces, and the rest through non-defence and export segments.

 

The company is seen posting a net profit of INR 11.2 billion for the September quarter, up 2.2% on year and over 15% on quarter, according to the average of the estimates of nine brokerages. These estimates range from a low of INR 9.6 billion by Nirmal Bang Equities to a high of INR 12 billion by Kotak Securities.

 

Analysts expect Bharat Electronics' revenue for the quarter at INR 53.1 billion, up 16% on year and 20% on quarter. The lowest revenue estimate is INR 51.7 billion by brokerage Prabhudas Lilladher, while the highest is INR 54.6 billion by Kotak Securities.

 

The estimated revenue growth of 16% for the September quarter is near the 15% on-year revenue growth posted by the company in the year-ago quarter. However, the estimated net profit growth of 2.2% for the reporting quarter is substantially lower than the 34% on-year rise reported in the year ago quarter.

 

The company's "sales may grow 14% YoY (year on year) due to a large order book," Elara Securities (India) said in a report. The company is likely to report revenue growth of around 13% on year "driven by healthy execution of a strong order book of Rs 749 bn (INR 749 billion)," brokerage Prabhudas Lilladher said. The order inflow growth of Bharat Electronics "has been strong" at INR 52 billion in the September quarter, up 100% on year, with the company achieving 48% of its guided order inflow for 2025-26 (Apr-Mar) in the first half, Kotak Securities said in a report.

 

Analysts expect Bharat Electronics to post weak operating profit growth on year and see its operating margin decline. The company's earnings before interest, tax, depreciation, and amortisation is expected to be INR 14.4 billion, according to the average of the estimates of eight brokerages. This is 3.5% higher than in the year-ago quarter.

 

Three brokerages expect the company's EBITDA to rise 6-10% on year, while another three expect it to rise by less than 4%. Two brokerages expect it to fall 1-5%.

 

The EBITDA margin of Bharat Electronics is likely to contract 90-400 basis points on year from around 30.4% in the year-ago quarter, according to estimates by five brokerages. The company's EBITDA margin will likely decline around 90 basis points on year "due to lower gross margin partially offset by operating leverage," brokerage Prabhudas Lilladher said.

 

The company's "quarterly variations in margins are a function of product mix," Kotak Securities said. The EBITDA margin will decline to 28.1% in the September quarter from 30.4% a year ago, the brokerage said.

 

Bharat Electronics will detail its earnings for the September quarter on Friday. Investors will watch out for the management's commentary on order inflow prospects, brokerage Nomura Equity Research said in a report.

 

Management commentary on supply chain, execution pace, order prospects, and its recent consortium with L&T (Larsen & Toubro Ltd.) to bid for India's AMCA (advanced medium combat aircraft) program, will be keenly watched, brokerage Prabhudas Lilladher said. The "finalisation of emergency procurement-related orders, execution of the huge (order) backlog, and further indigenization of modules and subsystems will remain key areas of focus," Motilal Oswal Financial Services said.

 

On Friday, shares of the company closed at INR 422.05 on the National Stock Exchange. The stock is currently up around 8% from INR 389.25 at close on Jul. 28, when the company announced its June quarter earnings.

 

In the trailing quarter, Bharat Electronics had reported a net profit of INR 9.7 billion, up 25% on year, on the back of revenue growth of 5.2% at INR 44.2 billion. Of the 14 brokerage reports on the company available with Informist, 12 have a 'buy' call on the stock with an average target price of INR 414, and two have a 'hold' recommendation.

 

Following are the September quarter earnings estimates for Bharat Electronics from nine broking firms in descending order of estimate of net profit:

 

Broking firm	Net sales	Net profit	EBITDA
	(In INR million)
Kotak Securities Ltd	54,578	11,952	15,353
Prabhudas Lilladher Pvt Ltd	51,653	11,866	15,186
Sharekhan Ltd	52,960	11,650	---
Nuvama Wealth Management Ltd	52,767	11,636	14,775
Motilal Oswal Financial Services Ltd	52,580	11,178	14,408
Elara Securities (India) Pvt Ltd	52,496	11,111	14,330
Nomura Equity Research	53,000	11,058	13,940
JM Financial Institutional Securities Pvt Ltd	53,806	10,364	13,183
Nirmal Bang Equities Pvt Ltd	54,338	9,593	13,751
Average	53,131	11,156	14,366

 

End

 

Edited by Avishek Dutta

 

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