Revenue grew by 23% on account of execution of large value contracts, yet earnings dropped by 19% due to drop in gross margins, higher pay expenses, lower other income and higher tax outgo in Q3FY18. We expect a strong order intake momentum of ~ Rs. 120bn-130bn annually till FY20E on account of orders for Akash, LRSAM, QRSAM, NVDs and EVMs.
Q3 revenue was up 23% YoY at Rs 25 bn, broadly in line with street expectation. Gross margin at 44% was down 600 bps YoY due to adverse product mix (higher civil portion). Management has guided RMC/Sales at 54-55% of sales in FY18 vs. 53.5% in FY17.
BEL delivered mixed set of numbers for Q3FY18 with revenue growing at a strong 23% whereas EBITDA and PAT were down 7.8% and 18.9% respectively. The decline in EBITDA and PAT was mainly on account of increase in employee cost and higher incidence of tax. Despite weak operational performance, we remain positive on the stock as strong order and BEL's strong order book and continuous indigenization efforts provide revenue visibility.
BEL reported PAT of Rs3.0bn, though down 19% YoY in Q3FY18 but ahead of our estimatesledbystrongbeatonRevenueandMargins.Lowbaseeffectoflastyear and good progress in large orders like IACC/Hand Held Thermal Imager helped the growth in execution. Order inflow for the quarter stood at Rs11.7bn (down 20.3% YoY). BEL expects the order inflow to remain healthy at Rs100150bn for the next fewyears,giventhehealthypipelineoforders.Thecompanyexpectssalestogrow at ~1215% CAGR over the next five years. BEL is investing in capex to support executionofstrongorderbook;itisalsolookingatsteppingupR&D;spendfurther,...