Defence and aerospace major, Bharat Electronics Ltd (BEL) in the first quarter of FY24 reported a strong performance beating Street estimates. The company maintains its FY24 guidance guidance at 17 percent revenue growth and 21 to 23 percent EBITDA margins.

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In the first quarter of FY24, the standalone revenues are 12.8 percent higher at Rs 3,511 crore versus Rs 3,113 crore. The EBITDA margins stood higher at 18.9 percent versus 16.5 percent in the year ago quarter. The company says, EBITDA growth was strong due to lower raw material expenses. Furthermore, the profit after tax is 23 percent higher at Rs 531 crore.

The first two quarters of defence players are seasonally weak in a financial year as there is lumpiness in its orderbook. Although, it is noteworthy that BEL's first quarter performance was stronger than expected. The order backlog as on 30th June 2023 stood at Rs 65,400 crore up 18 percent year on year and 8 percent quarter on quarter. The quarter also marks the highest ever new order wins of Rs 8,100 crore. This provides revenue visibility in the near term.

The company maintains Rs 700 to 800 crore as capex guidance for FY24 and expects 15 percent revenue contribution from non-defense segment. The export orders in first quarter of FY24 stood at Rs 87 crore and targets $90mn export revenues in FY24.

The shares of BEL are trading 2.2 percent higher on July 28 noon. Since the start of the ongoing calendar year, the stock is 30 percent higher, similar to peers performance like Bharat Dynamics, Cochin Shipyard and Garden Reach Shipbuilders. From the defence pack, Hindustan Aeronautics has been the outperformer, which rallied 54 percent in CY2023 year to date.