The going is good

Research evidence excerpt

The going is good

Macquarie Equity Research Bharat Electronics

Key Risks to Investment Thesis Company Description

• Deterioration in working capital: Receivables build-up Bharat Electronics is the market leader in defence electronics

could result in weaker-than-expected growth trends. in India. Its core competencies are in the areas of radars,

• Regulatory changes: Significant orders are based on sonars, communication equipments, electronic warfare

nomination basis. Any changes to this could impact margin systems and tank electronics. In the non-defence sector, its

& profitability. product range includes EVMs and offerings for smart cities/

• Supply chain: Some contracts rely on imports to fulfil homeland security/metros/airports among others.

execution.

Figure 1 - India defence: Expenditure profile Figure 2 - BEL: Order backlog and inflow trend

7,500 1,200 600

6,000

900 450

4,500

600 300

3,000

300 150

1,500

- - -

FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27E FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27E FY28E FY29E

Revenue Expenditure (Rs bn) Capital Expenditure (Rs bn) Order Backlog (Rs bn) Order Inflow (Rs bn, RHS)

Source: Company data, Macquarie Research, May 2026 Source: Company data, Macquarie Research, May 2026

Bharat Electronics (BHE IN) INR/(bn) unless otherwise noted

Income Statement Mar FY 2026A 2027E 2028E 2029E Q4/26A Q1/27E Balance Sheet 2026A 2027E 2028E 2029E

Revenue 276.1 323.0 379.6 442.2 102.2 80.8 Cash 85.7 105.9 120.0 139.1

Cost of Goods Sold 140.3 164.7 192.8 225.5 52.9 41.2 Receivables 128.8 123.9 145.6 169.6

Gross Profit 135.8 158.3 186.7 216.7 49.3 39.6 Inventories 101.8 119.1 139.9 163.0

EBITDA 80.5 92.4 108.9 126.9 29.8 23.1 Investments 10.1 10.7 11.3 11.9