Bharat Electronics Ltd (BEL) Q2 FY27 Earnings Call: Order Book Crosses Rs. 68,717 Cr, Retains Rs. 25,000 Cr Inflow Guidance

Strong H1 Print, Execution Front-Loaded

• H1 FY 2026-2027 revenue of Rs.12,824 Cr — vs Rs.10,180 Cr in H1 FY 2025-2026, growth of 25.97% YoY; Q2 FY 2026-2027 revenue growth of 26% was attributed by management to faster execution (deliveries pre-poned by 1-2 months vs commitments) and a deliberate evening-out of quarterly output rather than Q4 loading.
• H1 FY 2026-2027 PAT of Rs.2,589 Cr — vs Rs.2,255 Cr in H1 FY 2025-2026, up 14.80% YoY; PBT at Rs.3,467 Cr, up 14.66% YoY. PAT growth trails revenue growth, implying margin compression at the net level.
• EBITDA margin of 27.43% for the period up to Q2 FY 2026-2027; H1 FY 2026-2027 EPS at Rs.3.54 vs Rs.3.09 in H1 FY 2025-2026.
• Order book of Rs.68,717 Cr as of 1 October 2026 — spanning 300+ projects; FY 2026-2027 inflows till 1 October 2026 at Rs.7,334 Cr (analyst-cited ~Rs.8,000 Cr).
• Management flagged the strong H1 partly as timing — Q4 is typically the strongest quarter, and any FY 2026-2027 upside to guidance would be a positive surprise rather than a base-case raise.

Rs.25,000 Cr Ex-QRSAM Guidance Retained; Big-Ticket Pipeline Dense

• FY 2026-2027 order inflow guidance maintained — Rs.25,000 Cr excluding QRSAM and Rs.50,000+ Cr / Rs.55,000 Cr including QRSAM ("we are sticking to that"); NGC is included within the Rs.25,000 Cr, not incremental.
• Largest orders in the book — per CFO Damodar Bhattas: electronic pieces Rs.4,200 Cr, LCA Mark 1 Rs.3,200 Cr, ELASAM Rs.2,900 Cr, BMP-2 upgrade Rs.2,600 Cr, Afini radar Rs.2,500 Cr, EW suit for ME-17 Rs.2,200 Cr, and one export order of Rs.1,700 Cr.
• Shatrugath, Samagath and Hammer — management hopes to receive all three orders one by one before March 2027 (end of FY 2026-2027); P75I clearance in FY 2026-2027 is uncertain and may slip to FY 2027-2028 — CMD called it a "pleasant surprise" if it lands in FY 2026-2027, guessing the sequence as MGC first, QRSAM second, P75I third.
• Execution runway is long — the fuse order has 6-7 years of execution remaining (to roughly FY 2032-2033/FY 2033-2034); LCA and BMP are to be executed within 3-3.5 years (by roughly FY 2029-2030/FY 2030-2031).
• Nomination concentration — analyst Harshad Patel (Equitas Securities) stated roughly 90% of the order book is nomination-based and flagged rising private competition including Adani Defense; management did not quantify the competitively-bid split for the FY28/FY29 pipeline, but asserted nomination and competitive-bid margins will be "more or less similar."

QRSAM Slippage Managed; NGC Orders Staggered into March 2027

• QRSAM order of Rs.30,000 Cr delayed ~7-8 months vs earlier expectation (per the analyst); guidance in FY 2025-2026 had optimistically targeted receipt by March 2026, with the internal expectation revised to a minimum of August-September 2026 (Q2 FY 2026-2027). Management is hopeful the next CCS meeting may bring a "positive surprise" and is "not alarmed."
• Escalation risk on QRSAM — CMD Manoj Jain said the government typically does not grant escalation for 1-1.5 year delays, so BEL may have to absorb interim cost increases, with at best ~6 months of escalation possible "if lucky."
• Advance execution actions underway — BEL has proactively started QRSAM QT and FOPM realization activities; ~200+ MSME partners are expected to participate under the public-private partnership model, with roughly 70% of orders distributed across them (period unspecified).
• Private-sector entry risk downplayed — management is >99% confident the QRSAM order comes to BEL, arguing it is a complex system-of-systems requiring 10-12 years of cumulative expertise; management's reading is that DRDO has listed 4-5 missiles for opening to the private sector and the QRSAM missile is not on that list.
• NGC (next-generation corvette) orders — of the ~Rs.20,000 Cr electronics opportunity (missiles excluded), management expects all line-item orders within 6 months, i.e., before FY 2026-2027 close, with negotiations ranging from 1 day to 6 months; some items may slip to April (FY 2027-2028). If all converge before March 2027, BEL would "definitely" cross the Rs.25,000 Cr guidance by a large margin.
• AMCA bid — BEL submitted jointly with L&T on a 50-50% consortium basis; 3 consortiums bid, with ~2-3 months of technical evaluation from end-October 2026 (into Q4 FY 2026-2027) and price bid hoped for before March 2027; the decision rests with DRDO/ADA.

Seekers, Drones, Cyber and DEW Build Depth

• Seeker opportunity sized at 0.2-0.3x of missile business value (period unspecified) — seekers account for 20-30% of missile cost; combined IR+RF capacity is 1,000+ seekers/year, scalable 2-3x if required (no timeline specified); a new Industry 4.0-compliant IR seeker facility has been set up at Nimbuluru, near Machilipatnam. BEL is not in BrahMos seekers to date but has proactively started developing the technology.
• Virupaksha radar — current order is development-only, with LRD handling integration and program timelines; management is confident production orders may come around FY 2027-28-FY 2028-29, calling airborne platform qualification the toughest challenge.
• Drones and counter-drones — BEL's second-most focused area after missiles, arms and ammunition; working with 6-8 startups plus in-house programs. FY 2026-2027 drone orders are small (Rs.50-100 Cr each); management hopes for at least 1-2 big drone orders in FY 2027-2028 (within a 1-2 year window through FY 2028-2029). Counter-drone export trials with foreign countries concluded successfully and export orders are hoped for "very soon" (period unspecified).
• Cybersecurity — BEL is currently executing Rs.400-500 Cr of civilian cybersecurity orders (as of Q2 FY 2026-2027) via a dedicated SBU set up 2-2.5 years back; pipeline leads may convert into a business of thousands of crore (period unspecified). Cyber is embedded within C4I solutions rather than a standalone line item.
• Directed Energy Weapons — BEL is developing both microwave (HPM) and laser-based weapons, with technology currently originating from DRDO; it is pursuing three routes (supporting DRDO, in-house R&D, startup partnerships). No order figures were provided.
• HAPS still maturing — management noted DRDO, a CSIR lab, and some Indian companies are in the development race; BEL is "in the process of selecting a right partner," with no timeline or payload role committed.

Delivery Discipline Improving; Indigenization Exposure Limited

• On-time delivery score instituted and improving — management is pushing the execution track record toward 100% "as early as possible" (period unspecified); Q2 FY 2026-2027's 26% growth came despite a tough base.
• Mechanical material indigenization is not critical for BEL — steels/alloys are hardly 1-2% of material cost since BEL is mainly electronics; management noted mechanical materials play a 10 times larger role in engine or aircraft design, making indigenization more relevant for HAL, other companies, and shipyards.
• Combat vehicle MOU with Midhani and BML — still at the technology development stage, not commercial procurement; the three companies are finalizing funding and are looking at technology development funds or other grants from the Government of India for this critical technology.
• Ammunition capability gap — BEL has no ammunition-making capability as of now and depends on MIL, Solar, and 2-3 newly emerged private-sector suppliers; Tamil Nadu Explosive Limited is owned by BEL for at least the next 30 years and has started missile (hot) integration activity, not ammunition manufacture.
• Missile economics underpin strategy — management cited 60-70% of a missile's cost as electronics, which it explicitly cited as the rationale for missiles being a focused area; BEL is the formal DcPP partner for DRDO on the LRLACM and Preligh missiles, with orders for these two expected in future (period unspecified).

FY 2026-2027 Guidance Reaffirmed Across the Board

• FY 2026-2027 guidance reaffirmed in closing remarks — revenue growth of 15%+, EBITDA margins of around 28%, order inflow of minimum Rs.25,000 Cr excluding QRSAM and Rs.50,000+ Cr including QRSAM, R&D investment of Rs.2,200+ Cr, and capex of around Rs.1,200 Cr.
• Defense-to-non-defense mix guided at 90:10 for FY 2026-2027 — management acknowledged there may be positive surprises to the 15%+ revenue growth guidance (as predicted by analysts) but stated confidence in meeting the base guidance.
• EW demand seen structurally rising — management cited a "very hostile" EW environment and rapid technology turnover in radar and communication systems (analogous to the 3G→4G→5G→6G shifts); no specific follow-on GBMES order commitment or quantified guidance was given.
• Repeat-order visibility in air defense — management affirmed QRSAM and its variants will come through again over the next few years, citing the Akash precedent: first order roughly 20 years back, 3-4 series orders since received, and 2-3 more series in the pipeline (period unspecified), with technology refreshes every 3-5 years.
• Quantified three-year projections — typically shared at the April 2027 call; three-year yearly plans are reviewed every quarter in the interim. QRSAM delay impact on FY 2027-2028 execution is too early to quantify, per management.