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Defence Sector: Order inflows doubled in FY25

ICICIdirect Research 07 Apr 2025 DISCLAIMER

Total orders worth Rs 2.09 lakh crore have been given by the Govt in FY25; which is almost double of orders worth Rs 1.08 lakh crore given in FY24. Defence exports have also increased by 12% YoY to Rs 23622 crore during the year, mainly led by 43% YoY growth in exports by PSUs

Bharat Electronics (BEL) reported revenue growth of ~16% YoY for FY25; which is largely in-line with expectations and management’s guidance. Though implied revenue for Q4FY25 looks 2% lower on YoY basis. Order intake during the year remained healthy at Rs 18715 crore, though it was lower than management’s guidance of Rs 25000 crore. Order backlog stands strong at ~Rs 72200 crore (3.1x FY25 revenue). We have a Buy rating on BEL with a target price of Rs 355

Bharat Dynamics (BDL) reported revenue growth of ~40% for FY25 as the execution improved significantly over the last two quarters after facing some supply-chain disturbance in the previous quarters. Implied revenue growth for Q4FY25 is also strong at 103% YoY. Order inflow during the year FY25 was much better at Rs 6670 crore as against Rs 1800 crore in FY24. Order backlog of Rs 22700 crore (7x FY25 revenue) and strong orders pipeline gives strong revenue visibility.

Hindustan Aeronautics (HAL) reported flattish YoY growth in revenue for FY25 as the execution was impacted during the year primarily in two contracts, Tejas Mk1A (due to un-availability of engines) and advanced light helicopters (due to accident happened in Jan-25 and grounding of fleet after that). Implied revenue for Q4FY25 also looks down by 11% YoY. Order inflow remained strong at Rs 1.2 lakh crore with order backlog standing at 1.84 lakh crore (6x FY25 revenue). Moreover, pipeline remains robust as the large contracts like additional 97 Tejas Mk1A and Sukhoi upgrades are also expected to be signed soon. We have a Buy rating on HAL with a target price of Rs 5000

Garden Reach Shipbuilders and Engineers (GRSE) has reported revenue growth of ~32% YoY for FY25, as the execution remained healthy and came in-line with management’s guidance. Implied revenue growth for Q4FY25 is also ~30% YoY. Order backlog remains healthy at ~Rs 23000 crore (4.8x FY25 revenue).

Mishra Dhatu Nigam Limited (Midhani) has reported flattish revenue growth for FY25, which is lower than expectations and management’s guidance of ~20% YoY growth. The company maintains a robust order book valued at ~Rs. 1940 crore (1.8x FY25 revenue). Order backlog stood strong at Rs 1937 crores as of Dec-25 (1.8x FY25 revenue), led by orders inflows of ~Rs. 1000 crores during the period.

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