Bharat Electronics Limited (BEL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q1FY27 Earnings Conference Call of Bharat Electronics Limited, hosted by Motilal Oswal Financial Services. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. This conference may contain certain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company and may involve risks and uncertainties that are difficult to predict. I now hand the conference over to Ms. Tina Virmani from Motilav Oswald Financial Services for the opening remarks. Thank you, and over to you, ma'am.

Thank you, Aljay. Good evening, everyone. On behalf of Motila Loswal Financial Services, I welcome you all for Bharat Electronics Quarter 1, Fi27 Results Con Call. I would like to thank the management for giving us the opportunity to host the call. And from the management side, we have with us Mr. Manoj Jain, Chairman and Managing Director, Mr. Damodad Bhattar, Director, Finance and CFO, and Mr. Srinivas, Company Secretary. Thank you. Without taking much time, I hand it over to Mr. Manoj for his opening remarks, and after that, we will open the floor for Q&A. Over to you, sir.

Thank you, madam. Good afternoon, all. So, financial results for quarter one are just uploaded. Actually, our board meeting ended at 3.45. So, after that, we have just uploaded, and you might not have seen till now. So, I will just brief the major highlights of the quarter one of financial year 26-27. So, the revenue from operations has increased to Rs. 5533 crore up to Q1 as compared to Rs. 4417 crore in the previous year, Q1. So, with a growth of 25.27 percentage. The profit before tax increased to Rs. 1403 crore as compared to Rs. 1289 crore in the previous year at the same quarter, with a growth of 8.81%. The profit after tax has increased to Rs. 1048 crore up to Q1 as compared to Rs. 969 crore up to Q1 previous year with a growth of 8.17%. The EBITDA margin up to Q1 is 25.83%. The earning per share increased to Rs 1.43 up to Q1 as compared to Rs 1.33 previous year at the same time. The order book position as on 1st July 2026 is Rs 72,258 crores and orders acquired in this quarter is Rs 3,754 crores. So, this is a brief financial highlight of Q1 26-27 from my side. So, now the floor is open for Q&A.

Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Amit Dixit with Goldman Sachs. Please go ahead.

Yeah, hi. Good evening, everyone, and thanks for the opportunity. A couple of questions from my side. The first one is with respect to order inflow that we have witnessed in this quarter. If I compare it with Q1FI26 and Q1FI25, the order inflow has been pretty lean. Just wanted to understand the reasons for that, whether you see a more structural component to it Or it is just, you know, the timing of the orders. I just wanted to get a little bit more understanding on that. And also, QRSAM order, which seems to have been delayed. That is my first question, sir.

So, let me tell you, last year, you may be knowing that we were supposed to get orders by 31st March. But one or two orders we got in the week of April. So, that's why we could not meet our, actually, previous year target. But our first quarter orders were very good, but actually there was more of a spillover of the January to March quarter. This year it was more structured. So whatsoever we were going to get by January to March, actually we got actually 2,000 to 3,000 more, I can tell you. Because we thought around 25,000, but we finally landed in around 30 plus. So, that's why there was no backlog per se. Actually, one or two orders were taken from this year, first quarter also. So, this year, whatsoever, we have received 3,700 plus crore. It is a what-was we planned, that only. So, as such, there is nothing to worry. We are definitely going to meet the guidance given about the order inflow for this year. And QRFAM, we told we were highly optimistic to get it by March, but procedural delays we knew. That's why we told it may go to Q1 oblique Q2. Maximum by September we will get. And I am still sticking to that. Just CCS only is waiting for all of us. And hopefully when CCS meets, I think they will clear QRFAM. Our side, all inputs, every activity is over from all of us side. So, we are just waiting for the CCS approval, and at that time, we will get the good news about QR10.

Great, sir. The second question is around Project Kusha. We have seen that there has been testing of M1 interceptor. There has been some movement around RFP of M2 also. So, just wanted to get your thoughts on when will the testing be complete? When do we expect to get the order, and what could be our portion in that?

As I told earlier also, the KUSHA program is spearheaded by DRDO, and we are their largest DCPP partner for various subsystems. So right now the trial was of the missiles. Then after that they will do different configuration of missiles, then configuration with radar, control center, as a integrated fashion, etc. They will have their own structured way of testing. So that question actually you have to ask from DRDO. Let me assure you, from our side, there is no delay in water subsystems, systems-level support, which we have to extend to DRDO for this very, very prestigious project. As already told, I think the order will be of the order of 40,000 plus crore we are expecting, but that will be minimum 28-29, which we had indicated last time also. So, after this series of testing, then there will be lot many more different type of evaluations. After that, only RFP will be issued. For commercial activities. So, it is still a long way to go. So, you have to wait and watch with this different, different R&D level development, which is done by DRDO, well supported by BELL.

Okay, sir. Great. Thank you so much and all the best.

Thank you. The next question comes from the line of Mohit Pandey with Citi Research. Please go ahead.

Yeah. Good evening, sir. Am I audible?

Yeah.

Yeah, okay. Yeah, sir, the first question is again on orders. So, explanation on the YOY decline is quite clear, but just wanted to get a sense of this year for the base orders. Are we expecting them to be backhanded or they will be likely evenly spread out through the course of the year? That would be question number one.

Okay, let me tell you, the thing is, we don't publish quarter by quarter targets for this. That is our internal assessment only, what leads or what PNCs concluded, not concluded, and based on that, we have our own internal follow-ups on any sleep pages, if at all. But quarter to quarter, we are not publishing. For us, it is a yearly target, and which we have already given at the start of the year, the guidance. So that is 55,000 plus crore, including QRSAM. So we are sticking to that, and definitely two, three big programs are in the real pipeline of CCS or other type of approvals. So we are not forcing any problem in getting these order inflow for this year.

Understood, sir. Sir, and while we don't publish the balance sheet or cash flow with first quarter, any color you can give on the payments or receivables? Yeah. Has there been an improvement versus fourth quarter? That would be one. And secondly, on margins, if you can give any color on, so this quarter, there has been a worldwide decline. Any particular thing that you'd like to highlight there? Is this just product mix or are there any one-offs, et cetera, as well?

Yeah. As far as the receivables are concerned, the number of days as on 30th June, it is at around 140 days. It was 176 days as on 31st March. So, it is at 140 days as on 30th June. So, it has improved for March. So, receivables are good. Cash flows are good. There is not much concern on those front. As far as margins are concerned, as we have already told, current year EBITDA margin guidance we have given of 28%, we remain that quarter on quarter, there could be variations because of the composition of product mix. So, due to that, there are some variations, but otherwise the current year EBITDA guidance, whatever we have given, we maintain that. So, there is no particular cause of concern for the margin on the quarterly basis, we don't have So, to go by that, overall on a yearly basis, we maintain the EBITDA margin of 28%, which you have given already.

Understood, sir. So, just to clarify, the margin, it's due to product mix and not due to input cost pressure. So, just to clarify that, so you're saying this is due to product mix variation, yeah?

Yeah, yeah, yeah. We are telling it is due to product mix variation, not due to input cost.

Okay, sir. Okay, sir. I'll come back in the queue. Thank you so much and wish you all day.

The next question comes from the line of Kavish Parikh with 361 Capital. Please go ahead.

Hi, team. Thanks for the opportunity. Sir, regarding the order book that you're sitting on today, could you help us understand the broad split across categories, say, naval versus air versus, say, land-based systems and implementing in terms of order inflows over the next few years, Excluding QRSAM, which of these segments do you expect to be the key growth drivers?

Let me tell you, Army, Navy, Air Force, more or less, it is similar. So, 30-30-30% out of the total, 100% which we are having, so 90% is from defense. So, roughly 30-30-30% is Army, Navy, Air Force. And order inflow also are more or less in the same line only. QRFM actually is Army and Air Force combined order, but there are Air Force related also some big ticket, Navy also some big ticket items will be there. So again in the year this 55,000 also more or less it will be evenly distributed across Army, Navy, Air Force. So, as such, there is equal priority, I should say, and or equal confidence of all the three forces in this. As on today, the major order, as per order book, the main components are electronic fuse for Army, LRFM for Navy, LCA LRUs for Air Force, BMP-2 upgrade again for Army, Ashwini radar for Air Force, and EW-2 Mi-17 V5 again for Air Force, MPR Arudra Air Force. So like that, these all major order book is again spreaded across all the three services.

Understood. And as a follow-up to that, would the margin profile differ meaningfully across these segments, or is profitability largely product-specific irrespective of the segment? And just if I can continue with my second question, what were the key products executed during this quarter, some which you would attribute for the margin decline this time?

Okay, we cannot extrapolate that because of this product margin decline was less or more, especially because, again, we are giving you only a glimpse of some top 8-10 projects, not the details, because detailed projects are so many. So firstly, this margin spread across Army, Navy, Air Force is uniform because overall we are having across Army, Navy, Air Force separately some subsystems and system of systems type of projects. So it is not that in particular one segment, our Army, we have less margin or our Navy, more margin. It is not like that. It is spreaded across type of solutions and our solutions are spreaded across various varieties. The major orders executed in this quarter were LRSEM, MPR Arudra, Links U2, Upgradation of Periscope, BSS Projects, some supplies, EON51 systems, Akasti, some supplies, Himshakti systems, some supplies, fuses, and receivers. So, again, this is only like 10 important projects, but overall projects are many more. So, again, correlating that this particular project has less margin or this has more margin, it's not correct to estimate because of the total spread across number of projects which we execute, even in a quarter also.

Understood. And just the last question from my side, sir, on the counted role ecosystem, could you share some thoughts on VEL's role today? Which systems or products are we currently involved in and what components or subsystem do we supply? Here, the private sector also appears to account for a sizable share of the opportunity of the overall market. Could you share your perspective on which players are doing well in terms of innovation and product development and which areas within the counter-drone market remain relatively untapped today and where do you see opportunities for BEL to expand its presence or say gain market share?

Firstly, let me tell you, drone and counter-drone, this market is growing like anything, because you might have seen in the recent conflicts also, the real threats and real deterrence, most of them are centering around drone and counter-drone solutions. So, the market is growing exponentially, where there is an opportunity for big companies like Bell, mid-size companies of private sector like Gen Technologies, so many other companies are there, and startups. So, there is growth prospectus for all of us. So, we need not worry or need not eat the cake pie of other fellows. So everyone has some unique solutions. What we are more focused is large, high-power, laser-based or microwave-based DEW solution, integrated D4 solutions, means real with hard kill. So, more of hard kill based, more complex systems we are more focusing on. But it doesn't mean that we are not working on drone killing drone or EW Jammer itself killing or bringing down the drone. So, we are having also some products which we call D2, some products D3 and some products real D4 variety. D4 means this will have hard kill also. So, hard kill, soft kill, only detect, and then use some other conventional way of neutralizing this total complex solution. We are more focused. Again, I am stressing we are more focused on this hard kill based large systems more. But other players are there and especially startups are there for the D2 type of systems and different innovative solutions. But there is a requirement of all type of solutions for drone and counter drone. So, we don't foresee a challenge, and definitely, we have put our own CRLs, Central Research Laboratories, and PDICs to look into some more innovative solutions, either themselves or collaborating with some startups. So, good startup ecosystem also, we are tapping now, and a few order, although right now small, we have taken jointly with the startups, and we are going in a big way for this type of small, small innovative products also. But the same case may be true for our so-called mid-size competitors. But of course, this large, complex domain solution, right now we are the de facto leader.

Understood. Thank you a lot for that explanation, sir. Thank you so much. All the best.

The next question comes from the line of Harshit Patel with Equirius Securities. Please go ahead.

Thank you very much for the opportunity. So my first question is, you have highlighted the potential large orders materializing from major naval platforms such as NGC and P-75I. Could you also give some color on potential order sizes from the fall-on C-75, that is, three submarines, C-18, that will be next information destroyer, and the fall-on on C-17A, that will be C-17B. What could be the potential order sizes for us from this large project? I understand they might not materialize in FI27-10, but over FI28 and FI29, what could be the price it was?

Let me tell you, right now it is too early to predict the business volume of that. Like P17, Bravo, P18, or other projects, NGD. So these projects, we are in the configuration finalization, technical interaction, specification finalization. Sub-system, indigenization, in those type of roles right now. So, that role we are playing jointly with our DRDO or our Navy friends. So, that activity, once it crystallizes for one of the program, with the timelines given by them, when it starts discussing BQs, that time only we will really come back to you about real time frame when we may get this order and the size of the order. Today, it may be a bit early, maybe one year down the line, at least for, maybe NGD, we may have better clarity about these two figures. So, these programs are definitely beyond 28-29, so not before. So, it takes its own time to finalize the configuration and finalize the exact volume of business for them, these programs.

Understood. Yes, sir. Secondly, the media report suggests that...

Harshit, I'm sorry to interrupt. Your voice is a little muffled. Could you please use your phone on the handset mode in case if it's not on handset?

Is this better?

Yes, a little better.

Thank you. The recent report suggests that Adani Defense will be the electronic system integration partner to DRDO for the Metra 2. Will we have no role to play over here? Which are the other areas and platforms where we will be competing with this credible competition going forward?

Just explaining about this particular Letra 2 project. So, this project, I think bidding was done maybe one and a half years back roughly. We also participated in the bid, but unfortunately we were not alone. So, it's part of the competition. So, in some program, somebody will be L1, somebody will be L2. So, in this particular program, Adani became L1, and they are the system integrator for this program. But, of course, subsystem level modules or capabilities of Bell will be made use of by DRDO as well as with Adani. So, our strength of subsystems like radar, EW, or data links, and so many subsystems are there in this NETRA program. So, those subsystem level expertise, DRDO, as well as ADANI will tap our thing. But, of course, the SI role in this one, we missed. We were not L1, and ADANI became L1. So, it is a part of life. Some program as SI, we will be L1. Some program, we may not be L1. But our subsystem strengths or our in-house strengths of developing these subsystems, that will definitely give us a good business down the line.

Thank you very much for answering my questions.

I will come back in the case. Thank you. The next question comes from the line of Balchandra Shinde with Motila Roswal Financial Services. Please go ahead. Hi, sir.

I would like to know on recent ASTRA MAC has been opened for the private players. So, how you see that as a trend for the missile programs, so many programs are coming up, how we see the private participation opening up in the missile programs?

Definitely, this question you should ask more from a private fellow than from a public sector like Bell, who is today not an established player in missiles. Although, we are also aspiring or entering into the missile domain. So, definitely, we are right now seeing from the other side, like the private fellow is seeing, we also are seeing. The issue is this particular domain as you again know during recent conflicts and last 2-3 years you have seen how important the missiles are for any war scenario. So quantity and quality both matters here. So definitely to keep case of search requirement there is a scope of so many players other than BDL for this particular search requirement to be met. So, where Bell and other private fellows also are pitching in, in two, three programs, we are actually collaborating with private fellows, and then we have got some orders as DCPP partner. So, as such, this particular domain is very, very important, and role is there again for BDL, Bell, and private companies. So, all of us have a role to play for meeting the search requirement, but let me again assure you, in most of these missile programs, the major electronics, today we are the leader, because that electronics is more complicated than a radar or other, where we have so many subsystems and expertise for customized solutions. So, that will give us enough future businesses.

And sir, how much one should assume the pipeline over the next five years for missile progress?

What type of missile production they are expecting. Similar inflow will be there for Indian missile programs also. So we can only extrapolate that. But exact quantities, etc., we cannot tell you. Because that is a strategic call which the government of India has to say.

Not we. We have to gear ourselves for that.

So we are gearing ourselves, that much I can assure you.

Thank you. Any sizable provision reverses that have taken place here or what is the reason for this decline and other expenses?

During the previous year, the provisions relating to the liquidated damages during this current quarter, April to June of 25, was on the higher side based on the delivery schedule of those contracts which are exhibited during the previous year, due to which current year that is not there. So, that is a difference where the other expenses have come down.

That is helpful, sir. And, sir, second question with regards to the counter UAV discussion that happened a bit earlier on the call. You mentioned that Bell would be looking more towards the directed energy weapons, both laser-based and microwave-based. So, sir, could you please throw out some color as to when should we expect a prototype in its most earliest phases being developed by Bell, and by when do you expect, you know, commercial sales from this product to begin?

No, let me tell you, we have got enough orders already in last three years for this 2 kilowatt laser-based DEW solution, and which we have most of that, something like 80% of those orders already we have supplied also. Of course, microwave DEW-based solutions right now is still under evaluation, although we have the prototype ready. These prototypes we had made jointly with DRDO. But parallelly also, we have started some customized configurations, especially for export purposes. So in export, we are getting very good leads. We have given very good demos to some of the countries, and they have shown very keen interest on this high-power laser or microwave-based DEW solution. So, we have our own in-house strength to make customized different products for the basic design, but the basic design originally came from DRDO for us. They were our real development gurus. So, but today we have the capability to customize them or to come out with different versions, upgrades, upgrade on range, upgrade on higher power laser, etc. So, there are a series of product versions, we call it. So, they are already pipelined, and a one or two we have given, demonstrations also to our end users, as well as to our, some of the external countries, export countries, who have shown some interest. So, as and when this order, confirmed order comes, I will again let you know.

You got it, sir. Thank you so much.

The next question comes from the line of Dipen Vakil with Philip Capital. Please go ahead.

Hi, thank you for this opportunity, sir, and congratulations on a great execution. Sir, my first question is on your autobook, sir. So, you currently have 72,000 crore worth of autobook. Can you help us with the autobook breakup for like 10 major orders that are there? So, what would be the quantum of these orders?

Yeah, certainly, certainly. So, the main order are fuse. No, one minute, one minute. Just one minute. And the last slide we have left. There we have that before, which I was reading. Product by product, I will just tell you, there were, first one is fuse, of course, largest order book consists of fuse, because fuse requirement is for 8 years more we have to supply, and then we have LRFM orders, then LCA Mark 1 and Mark 1A LRUs for this 83 and 97 aircraft, then this BMP-2 upgrade, Then Ashwini Radar, then EWSUIT4, Mi-17 V5, then MPR, Arudra. So, these are the top 7 projects which are there in our order book as on 1st July.

Is it possible to share quantum of the order book?

These 7-8 projects are around 20,000 crore, out of 76,000 crore. So, but overall, you know, we have so many small, small projects, consisting of around 400, 500 line items minimum. So, these are the top 7 items which consist of around 20,000 crore, plus of order book today for me. Got it, sir.

Sir, my second question is that, so, for the order pipeline that you have suggested for 55,000 crore, if we consider excluding QRSAM, which would be the major orders which are currently gaining traction on the expected lines?

As I told last time, also, Shastrugat and Samagat, we may get in another 3 to 6 months timeline. So, the biggest is that after QRSAM. Then, as I told, NGC or P75I, one of these two, definitely we may go through. Maybe both of them we can go through because government has to give approval. Again, they are waiting for CCS approval only. But we are confident out of that, as I told last time, at least 100% probability of having at least one of them and more than 50% probability of getting both of them. So, that's why in these two programs are the another major subsystems are there in these two programs for which we may get a big order. Of course, Hammer project also we are going to get in this financial year and Shakti phase 4. So, these are also a few more major programs which we are expecting orders in this financial year.

Got it, sir. And, sir, apart from these platform orders, base orders, what could be the quantum of base orders that you are expecting in this year?

We put together, I told now, total 55,000 crore. Out of that, 30,000 roughly will be QRSAM. Then around 15,000 plus is this platform order. And remaining will be the other base orders of smaller quantities, support, services, or AMCs. All these put together, remaining. Got it, sir.

Got it. That's all from my side. Thank you so much and all the best.

The next question comes from the line of Atul Tiwari with JP Morgan. Please go ahead.

Yes, sir. Thanks a lot, sir. Sir, my question is on the likely

impact of pay commission provision.

I'm sorry to interrupt. You're sounding a little muffled. Could you please use your phone on the handset mode in case if it's not on handset?

Hello, sir.

Is it much better? Yes, please go ahead. Yeah.

Yeah. So, my question is on the likely impact of pay commission provisions on company's margins over next two, three years. So, when will these provisions start, in which quarter, and what will be the likely quantum and the impact on the margin?

See, current year, January 27, current financial year, from January 27 onwards, the wage division is due. So, for the current year, the provisions will be made for three months period, January to March 27. This is for the current year. Next year, of course, it will be depending on settlement, things settle or not. Again, if it is settled, it's fine. Otherwise, it's full provision. As far as the impact is concerned, because the turnover will be increasing year on year, as we have already told that we are projecting a good growth in the coming years, we expect the employee cost to turnover to be in the range of around 12% even in the coming years also, which is now also 12% last year. In the coming years also, we expect it to be in the range of 12% employee cost to turnover percentage, since the turnover will also be growing in good scale.

Okay, sir. So, despite the Pave Commission permissions being implemented, you don't anticipate any change in employee cost to the revenue ratio over next to three years?

You are right. Since the turnover will be increasing in that scale, so the impact of the employee cost, whatever increase has happened after the base vision, will be absorbed by the turnover increase and the overall percentage, you expect it to be around 12%. Thank you, sir. Very clear.

Thank you. The next question comes from the line of Vikas Singh with ICICI Securities. Please go ahead. Good evening, sir. Thank you for the opportunity.

Sir, my first question pertains to, while we are very confident on maintaining the margins in FY27, do our supplies in context shield us from any material cost inflation in FY28, FY29 as well, or those probably would come at a later stage in terms of contracting?

No, we are not forcing any change because of material cost inflation. The thing is, as I told earlier also, we are in the continuous state of indigenization drive, and that will directly, indirectly compensate for this type of material cost escalations or any other issues which can come in the near future. We are actually increasing our investment on indigenization in a much more larger scale, and we are reflecting in our MOU with government also. So, these extra efforts which we are putting, again, let me assure you, will make us safe from margins, etc., or escalations which may happen in future. We are taking these type of proactive steps to control that.

So, if you could share your ambitionization current process, what you are aiming for in couple of years?

The thing is, aim is the next five years, zero import of any module, sub-module level things. So, barring components, semiconductor components, all other type of subsystems which we are importing, Some of the subsystem at RF, Microwave, RSVCs, or something, compute, etc., we are importing as a module. So these all modules, we have set a target to complete all these indigenization in the next five years, including verification, validation, certification as a form fit replacement. So that's we have made our target, and we have given enough provisions for that. We are coming out with our indigenization policy also. So, formally, we will release our indigenization policy, quoting this fact, which I have just recently told you. So, we are allocating some special budgets for this indigenization drive, and we have got very good support from industry also for that. So, our MSME and startups also are aligning us with us to meet our this indigenization drive.

Okay. So, sir, what would be our annual capex, and what percent of that would go for indigenization?

Let me tell you, CapEx, we keep outside of indigenization. Indigenization, we generally consume, if at all, our R&D budgets, and that definitely we are going to increase. Our main CapEx is for infrastructure for our, what we call production-related activities, capacity enhancement for that. That as we have given you guidance, 1200 plus crore rupee, we are investing under capex, which will take care of our production and other type of investments. And this indigenization, etc. comes from our R&D budget. And we are anyway, we had given guidance also, more than 2200 crore R&D budget we have allocated for this year for all type of niche technology development, indigenization and other collaborative R&Ds.

No, sir. And lastly, any update on AMCA program?

Definitely, AMCA program, we and L&T are really working together, and more or less, we have arrived at our internal pricing, and all type of sub-modular clarity has happened. We had a PECS-level meetings, which means two senior-level meetings also happened, and I think one more meeting, we will finalize everything, so that we are ready to submit

Okay, so there is some deadline which was extended for the RFP submission. So, now, what's the new deadline now?

I am not exactly sure whether it was extended by two months or three months. Actually, I knew that it is extended, and that's why in the month of August, we are making our response ready by mid-August, but I am not exactly sure about how many months extension we have got. Maybe before the end of this call, I will let you know. Because that's my working-level team is doing. We were expecting a two-month extension, hopefully. But what we have got, I am not sure. But definitely, we will meet that timeline. That much, I can assure you. But I will come to know about the exact timeline in a few minutes.

Noted, sir. Noted.

Thank you and all the best. Thank you. The next question comes from the line of Jyoti Gupta with Ashika Group. Please go ahead.

Good evening, sir. Thank you for the opportunity. I just wanted to understand that, you know, delay in Tejas, which was expected somewhere, you know, for Tejas to be delivered, the fully loaded ones by August, apparently there is no visibility as of now, even today. Okay, so the subsequent six which are supposed to come, apart from this four, in the upcoming six months, now, if the four doesn't get delivered, then any further, don't you think there will be delays in terms of, you know, requirements or supply requirements for the remaining six stages? So, will that not impact your revenue or your margins on that front?

Yeah, yeah, yeah. Let me again clarify. We are only selling these LRUs to HAL. And these LRUs are around 11 types of main LRUs related to LCA and then some other EW related additional LRUs which they take time to time. So, these LRUs are electronic modules, which are separately tested as per the approved procedures, and then we supply them to HAL. Let me assure you, we have given much more than what they really want to them. So, they already have enough numbers of electronics LRUs as per the contract delivery schedule we have given them that is available with them. So, let me again assure you, no TASAS will be delayed because of LRUs being supplied by BAL late. That much will not happen, I can assure you. We have given enough quantity to them to make. Right now, as per the reports from public and media, the main bottleneck is still the engines.

No, but I wanted to understand that while you have already supplied more than that is required, will that not affect the pipeline for the further ones? Because if the current status is a status quo, then possibly going forward could actually come to a standstill. My point is that.

Okay, your point understood. Sometimes, generally, these electronic modules are separately tested and they can be kept as a stock also. But in case, in case, HL tells us to go slow, we need not make then those modules. We will have the material with us, but we can make the module and test the module based on their supply timelines. As on today, they have not indicated any slowness to us. So, we are going ahead with our planned capacity and planned planning for this program. So, as such, there is no issue, but in case they tell, it may, if at all, affect by few hundred crores here and there for us. So, maybe 200-300 crore rupee turnover may be shifted by few months for me, but that definitely when we are planning for 30,000 crore, 300 crore is less than 1% and this type of business level so-called changes or schedules, plans, etc., they are part of life and we can definitely absorb this type of less than 1% significance for this type of delivery schedule related negative challenges, I should say. So, that we can do. Okay. And now, let me tell about this AMCA program. Now, I think the date is shifted by two months. So, 27-8-26 is the date of RFP submission. So, actually, it was shifted by two months. So, 27-8. So, it is there right now, the RFP submission date.

Okay. Thank you, Samatha.

Thank you. The next question comes from the line of Aritra Banerjee with Nomura Holdings. Please go ahead.

Yeah. Hi, sir. I hope I am audible. Thanks for the opportunity. So, I have two questions. One is, you know, we have received LRSM contract work around 92 billion in FI-19, but still a sizable portion is still unexecuted in an order backlog. So, are there any reasons behind this that why it has still not been executed?

You are referring to LRFM. So, LRFM delivery schedule itself was spreaded over last year, very small quantity, and this year only measure of the quantities for this particular one will be there. So, as per schedule only, we are going. Nothing to worry, nothing delays are there in this program for us. The leftover activity is around 3,000 plus crore total we have to supply, and out of that, majority we will supply this year. Maybe some few hundred crore will go to next financial year. But it is as per the delivery schedule only. So nothing worrying thing in LRFM program as of now we are seeing.

Got it, got it. Sir, could you just repeat the quantum that will be delivering this in the amount invested?

I am not exactly giving you the exact value, but out of the 3,000 crore which is left over right now for LRFM program, Around 2,200 to 2,300 crore, 2,100 crore is planned in this year.

Okay, okay, okay. And another follow-up question is regarding QRSM. So, that will also have a similar execution timeline of 7 to 8 years in the future?

No, no, no. The first order is the 7 to 8 years spreaded because it is having FOPM, then FOPM evaluations, and then only the bulk production will start. So, next order, whenever we may get, definitely, if it is for the similar quantities, we can supply in three to four years.

Okay. Okay. Understood. One last question is regarding the delays in ordering of NGCQRS and all these programs. So, is there any risk of, you know, lower than expected revenue growth in FI-28 at least because of the delays in this ordering?

No. So, let me tell you, financial year 28 per se, let us say, these both programs are not constituting in our delivery. These are in our order acquisition target of this year, and something will spill over to next year, but they are not in my execution plan for next year. In my execution plan is whatsoever order I already have got and some other smaller orders. So many smaller base orders, as we told, they keep coming for us. So those orders will have generally 12 to 18 months type of delivery schedule. So those orders will keep my next year also. This year and next year is mainly depending on those type of orders. These large platform orders, they will start giving me big turnover after two years, not immediate.

Got it, sir. Got it. Thanks for answering your questions, and all the best for the coming quarters.

Thank you. The next question comes from the line of Bhavya Gandhi with Bajaj Alternate Investment Management. Please go ahead.

Yeah, hi, sir. Yeah, hi, sir. Thanks for the opportunity. Sir, just wanted to understand, because we've guided earlier for 28% EBITDA margin, so for the following quarters, we'll require closer to 29% EBITDA margin on an average basis. Is that really achievable, sir, going forward for the coming quarters?

Definitely, yes. We have a variability of 25 to 31% EBITDA margins based on the product mix in quarter to quarter, etc. But at the year end, let me again assure you, we will cross 28%.

Got it. And, sir, over the years, you had earlier alluded also that you want to increase the R&D spread to closer to 8%. So, on a longer-term basis, on a 2-3-year basis, this kind of margin is sustainable because R&D expense is currently at 6%. 2% contribution further to R&D expenditure. Will it take a hit on the EBITDA margins going forward on a longer-term basis? This is likely 2-3-year basis.

No, no, no, there only is the real tricks. More you invest in R&D, likely chance of more EBITDA is there. Because you are making this technology, you are developing something, you are doing more indigenization. So, I don't foresee 6.5 or 6.8 right now to increase to 8 will hit on margins. Actually, I feel it may finally make my EBITDA margins more sustainable, although my product mix may here and there change. So, these are based on previous experience of ours. In last 50 years, we have seen, we are continuously increasing our R&D expenditure, and with R&D expenditure, we have seen the returns are coming in different, different forms. One is self-sufficiency in technology, and of course, indigenization, more indigenization gives us, More EBITDA margins. Perfect, sir. And is it possible to quantify the indigenization figure currently? As such indigenization figure, I think indigenous content across platforms is one figure. So for major platforms, we give that type of figure. But for company level indigenization figure, there is no final formula.

Turnover by 80%.

Overall, our turnover, 78% to 80% comes from indigenous products and technologies. Got it.

Got it. Fair enough. Thank you so much, sir. Really appreciate it. Thank you.

The next question comes from the line of Rahul with Macquarie Group. Please go ahead.

Yeah. Good evening, sir. So, I have two questions. Which are the international markets or partnerships and product segments, you know, offer the best opportunity for you to increase your export revenue and reduce, you know, your dependence on the Indian defense budget cycle?

Almost all products and technologies which we are right now delivering to our Indian customers, there is a huge demand of that in international market also. But the main, main products where we are seeing are radios. You might have seen that last year we have received the largest order of around 2,000 crore rupee worth next generation software-defined radios, SATCOM solutions, and then D4 type of solutions. We have increased our TR module type of build-to-print type of a market, for airborne equipment especially, because there, whatsoever our quality and our infrastructure is there, we are increasing our presence in that type of a high professional-grade airborne modules. So, that also will be at module level, and system level, as I told, mainly about communication, our WLR type of weapon systems. So, those type of things, there is a long list. We are very, very confident that we are going to give you much more better export-related figures than what we are currently having.

Sure. Sir, and my second question is, you know, you've indicated your plan to increase exports, you know, to about 10%. And I think you also talked about increasing R&D. I want to know which of the specific areas, you know, that you're directing your incremental R&D spend. This will help us understand the direction that BEL is taking. And I think you already talked about microwave-based and laser-based weapon system. So, any more areas that you could call out where you are looking at spending more incremental R&D?

Let me tell you again, because we are in defense electronics domain, each and every area is important for us because each and every area has some technological upgradation, like example of AI. The AI is not limited to only Army or Navy or Air Force or only to radar or laser systems. AI as a technology is required across all domains. So we are spending our R&D also across all domains. Of course, slightly more increase in R&D is on some of the big platforms type of projects for us. Means large equipments like some of the radar, sonar, EW, that type of program. In a mission mode also, we have taken a few more projects. But overall, I can tell you, we are spending evenly across subsystems, systems, and equipments, and on indigenization drive or subsystem module level. So, as such, we are spreading all our R&D efforts in all directions, including diversification into civilian domain, like rail, metro, aviation sector. So, like that also, we are doing space. So, diversifying into these new areas and consolidating our strength in present areas by infusing newer and newer technology. So, there only this whole majority of the R&D funds will go.

So my last question is on your employee cost that you talked about. Now, when it goes for incremental agreement that will be there, this will be valid for how much time period? And typically, what is the last time, you know, the hike that was taken? Because let's say you have a 3,000 odd crore expense towards employee. I'm just trying to think how much could this be in FI 27 or 28? Is it 10% or how does it work?

Last time the hike was in January 2017. That was for a 10-year period. So the next hike is in 2027, January 1, January 1.

Okay.

That's how I told that for the current year, for one quarter, the impact will be there. As far as the hike is concerned, how much will be the hike, we cannot tell at this time what will be the hike because for that there are certain committees which are set up at government level and then they guide us. But broadly taking Looking into account certain parameters of what we got last time and what we may get this time. That is how I predict IBA had estimated that the employee cost to turnover could remain in the range of 12% in the coming year and coming years also, in the next year also. Because the scale in turnover will be increasing by that time. So even if the employee cost three months provision is there in the current year, even next year, either provision or full settlement may happen. But overall impact on the employee cost to turnover percentage may not be significant.

Sure. Thank you very much, sir, and all the very best.

Thank you. The next question comes from the line of Sriram Kapoor with Jeffrey's group. Please go ahead.

Hi, sir. Thanks for the opportunity. Just want to ask about your 15% revenue growth guidance for this year. So, given that you know you've done 20% in the first quarter itself, are we on track for, you know, likely beating this 15% revenue growth? Could it be higher?

Definitely, as I told last year also, target is 15%. Last month, we may surprise you by maybe half percent, one percent, one and a half percent. I don't know how much more we can have, but our balanced plan is 15%, and I am confident we will reach 15%. Quarter-to-quarter, there are variations from previous year to this year. So, that are generally there in all our defense-related projects. So, as such, we are confident to meet or exceed 15% guidance. Thank you. First order, immediate first order, which we may get in this financial year for these three programs, because subsequently there will be definitely many more orders for all the three. So for Shatrugat and Samagat, I think I told you around 9,000 plus crore we may get from Shatrugat and Samagat. And about Shakti, it will be around 2,000 crore. And about Hemar also, it is around 2,500 plus crore. So, these three orders we are going to get in the financial year itself, and subsequently repeat orders, there is a good potential for them to have repeat orders, but repeat orders definitely will come after two plus years only, because this execution itself will take around two years. So, beyond that only, the repeat order will come once we supply major quantities of present orders, then only.

Understood, sir. And just lastly, the way you, given that, you know, the last time you're expecting around rupees 21 billion delivery, worth of deliveries in FY27, which was some of the other programs that you're expecting to contribute to your FY27 revenues, if you could quantify them?

Definitely, we have done our planning and recently we have finished our roll-on-plan meeting also, reaffirming how much for which program we may get. So, Akash Army, we are going to generate revenue more than 1000 crore, around 1200 crore. D29 EW Systems, MPR Arudra, BMP2 Upgrade, LCA, LRUs. So, these are around 500 to 1000 crore. Each one of them will give to us. So, overall in this, our 30,000 plus crore journey, these are the 6-7 important projects which will fetch me these type of turnovers.

Understood, sir. Thanks. I appreciate your answer.

Thank you. The next question comes from the line of Vipul Kumar Shah with Sumangal Investments. Please go ahead.

Hi, sir. Thanks for the opportunity. So, my question is regarding raw material cost, which has shoot up very sharply sequentially and year over year also. Of course, it may be due to product mix, but it has increased by almost 8 to 10% sequentially and year over year. So, is that due to any commodity price, inflation, or is that any one-off there or product mix, and how do you take any corrective actions for that? So, your comments will be welcome, sir.

So, let me again assure you, which was told earlier also, it is mainly because of product mix only. The thing is, traditionally also, because of our product mix, our material cost varies from 50 to 58, 59. Typically, it was around 55%, but based on the product mix, sometimes it drops down by 3-4%, sometimes it increases by 3-4%. So, that is a so-called healthy sign for our business of operation. So, right now, we are not forcing any pressure from this RMC. We have analyzed it thoroughly, this particular one, and based on the product mix only. The final conclusion was, it was because of product mix. It was not because of some pressure or because of raw material-related consumption or input cost suddenly increased, etc. If it will be there, definitely we will share with you the first.

And sir, what is our export pipeline and where do you see our exports two to three years down the line?

As I told you, export, we are having great leads right now. But leads to getting the order sometimes takes a little bit more time. So, presently, I am having around 465 million USD order book with me. But the leads which we are pursuing is at least 4 to 5 times more than that. And the leads, we may get it, that I can't directly predict. But definitely, this year, we have given our internal guidance of around 300 million dollars we should definitely fetch out of the leads which we are having. that is spread across again from 15 to 20 important products. So, we are confident to slowly and slowly increase our presence in export market because as you also remember and I told earlier, we want to finally aim at 10% of our revenues through export. So, we are working systematically to see that we reach that goal in the next five years.

And, sir, one small suggestion. If you can put a presentation with every result where you can form in a tabular fashion, platform-wise execution for each year for at least two years, it will be very helpful for investors and analysts to understand the company. This is a suggestion. If that is practically possible or not, you please think about it. Thank you very much, and all the best, sir.

Thank you for your suggestion. Definitely, much more detailed things comes in our annual report, which is really comprehensive, where we take care of everything. But every quarter, whether we can give that type of a thing, we will see, and we will see SEBI guidelines and other things also. But definitely, right now, we are complying to whatsoever guidelines, so as per Company Act and SEBI are there. But your suggestion is welcome. We will explore that, that other than annual report, Can we publish this type of data in the form of some presentation? We will look into your suggestion, certainly.

Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to the management for the closing remarks.

Yeah, my closing remarks, again, is same as my starting remark of the thing, that the Q1 was good, met our internal expectations. What we had planned, we have more or less executed all of that, and the future outlook remains the same. The revenue growth of 15%, EBITDA margin 28%, order inflow of more than 55,000 crore, including QRFM, the R&D investments more than 2,200 crore, CAPEX more than 1,200 crore, with a typical non-defense business of 90 raise to 10. So, these guidance, definitely, we are working towards, and I am confident we will achieve this guidance for this financial year. This is my closing remark for this quarter.

Thank you, sir. Ladies and gentlemen, on behalf of Motila Roswell Financial Services, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.