By Staff Correspondent
Bharat Electronics (BEL) has announced that it has signed a deal with the Aeronautical Development Agency (ADA) and the Defence Research and Development Organisation (DRDO) for an advanced medium combat aircraft (AMCA) programme. As a result, BEL’s shares rose on 22 February 2023.
The memorandum of understanding (MoU) outlines a collaboration between the companies to design, develop, and produce the Internal Weapon Bay Computer and other Line Replaceable Units (LRUs) for the AMCA, with the aim of providing lifetime product support to the Indian Air Force (IAF).
Despite the overall market weakness, BEL’s shares showed resilience. However, the defence company’s stock failed to sustain gains, trading 0.3 percent lower at Rs 95.30 on the BSE at 9:16am.
Sharekhan noted that BEL’s order backlog currently stands at Rs 50,116 crore, down 11 percent on-year and 5 percent on-quarter. This suggests that order inflow in the third quarter was not very strong. Despite this, BEL’s management remains confident in the company’s future prospects.
In an analyst call to discuss Q3FY23 results, the company stated that it expects new facilities to be completed within the next two to three years, which will aid in meeting upcoming requirements for defence orders.
BEL has budgeted for capital expenditures of Rs 600 crore and Rs 600-800 crore for FY23 and FY24, respectively. Of the current order book of Rs 51,200 crore, almost 75-80 percent is on a nomination basis, with around Rs 46,000 crore (80 percent) coming from the defence sector.
ICICI Securities has emphasised that the order book accretion is a significant driver of stock performance and that they will be monitoring the near-term orders that the company is expecting.
