Bharat Electronics Limited (BEL) Q2 2027 Earnings Call Transcript

Moderator:

Ladies and gentlemen, good day, and welcome to BEL Q2 FY27 Earnings Conference Call, hosted by ICICI Securities Limited. As a reminder, all participant lines will be listened on remote and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on a touch phone. Please note that this conference is being recorded I now hand the conference over to Mr. Vikash Singh. Thank you, and over to you, sir.

Vikash Singh:

Thank you. Good evening, everyone. A very warm welcome on Bharat Electronics Q2 FY27 Results Concall. On behalf of ICICI Securities, I would like to thank the management for giving us the opportunity to host them. From the management side, we have with us Mr. Manoj Jain, Chairman and Managing Director; Mr. Damodar Bhattad, as Director, Finance and CFO; and Mr. S. Sreenivas, Company Secretary. Without taking any much time, I'll hand over to Manoj, sir, for his opening remarks. Over to you, sir.

Manoj Jain:

Thank you. So I will just briefly summarize the financial highlights for H1, means Q1 plus Q2 combined for the years '26-'27. The revenue from operations increased to INR12,824 crores up to Q2 as compared to INR10,180 crores with a growth of 25.97%. The profit before tax has also increased to INR3,467 crores up to Q2 as compared to INR3,023 crores with a growth of 14.66%. The profit after tax has increased to INR2,589 crores up to Q2 as compared to INR2,255 crores previous year up to the same time with a growth of 14.80%. The EBITDA up to Q2 is 27.43%. The earnings per share has increased to INR3.54 up to Q2 as compared to INR3.09. The order book position as on 01/10/2026 is INR68,717 crores, and orders

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acquired until 1/10/2026 in this financial year, till now, is INR7,334 crores. So that is a brief financial highlights of H1, which includes Q1 and Q2 combined. That is a brief from my side. Moderator:

We will now begin with the question-and-answer session. The first question is from the line of Amit Dixit from Goldman Sachs.

Amit Dixit:

First of all, congratulations for a very good set of numbers. Sir, 2 questions from my side. The first one is with respect to QRSAM. If you can mention when can we expect to get this order. And recently, one of the companies in their con call mentioned that there is a chance of QRSAM being allotted to private companies as well. So any thoughts on whether our share that we have been mentioning around INR250 billion would see a decline because of that? That is the first question, sir.

Manoj Jain:

Yes. So as you know, QRSAM was developed jointly by BEL and DRDO. BEL was a nominated production agency, and we invested during design phase also. So a lot of learnings have gone in the last 10plus years. I think roughly, it started in 2014. And then we have submitted our bid based on the RFP issued to us. So as such, and based on our inputs also, order is expected on us very shortly. Hopefully, in next CCS, they may clear. They are clearing one by one all the big projects. So hopefully, we may get very, very soon, this order. Private company rumor, I think that was mainly because there was one statement somewhere that all the missile orders will be now open to private sector also. But QRSAM is not missile alone. It is actually a complex missile system where missile is only one portion of the total project, but it is a complete area defense system. It is an air defense system

consisting

of

different

type

of

radars,

launchers,

communication systems, interconnection of this and connecting this to Page 3 of 32

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the backbone. So overall, it is a complex system of system, I should say, and for which the expertise are acquired over a period of time by BEL right now. So I don't think at this point, that private thing is possible. Technically, may not be definitely, because it is a period of 10 to 12 years of cumulative experience of this type of complex system of system, which we have developed over a period of time. Of course, our guru is DRDO, jointly with them only, but we had put our R&D teams from day 1 in this program. So this program, as of now and more than 99%, I am confident it is coming to us very soon. But yes, in future, if government decides and if private sector comes up to that level, definitely, there will be chances of getting different type of orders to them and may start with some missiles as told in some of the public statements and later on migrate to complex systems also. If private sector comes up, it will be a really win-win over a period of time. I hope I have answered your question. Moderator:

Mr. Dixit, are you there? As there is no response, we move on to the next participant. The next question is from the line of Mahesh Raut from Nomura India Limited.

Mahesh Raut:

This is Mahesh Raut here from Nomura. Congrats on a very good strong operating performance in second quarter FY27. My first question is pertaining to Next Generation Corvette. Given that the contract was now signed with GRSE and Goa Shipyard yesterday, how soon we can expect a subsystem level awarding for advanced sort of weapons, sensors and navigations for you? And whether that awarding will happen on a competitive route or a nomination base? And given that I think now total ordering contract size has increased from about INR38,000 crores to INR53,000 crores. Do we anticipate incremental changes in terms of ordering size for us? Page 4 of 32

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Manoj Jain:

Yes. So at least one good news was out of the 3 big programs, which I think last quarter con call also we discussed the NGC, P-75I and QRSAM and all the 3 have some good stakes of BEL. So at least NGC is cleared, and it was signed also by the parent PSUs, GSL and GRSE. We are in touch with them. We already were in touch with them for items which BEL has to supply to both of them. Because those items, as it was told, was developed over a period of time. And now it is technically called buyer nominated equipment, but it has gone through all the processes of multi-vendor and then capability and then functionality adding, adding, adding. And now only based on the commonality, it was decided to become so-called BNE. So buyer nominated equipment is also a very, very long drawn process. So in this project, yes, there are so many buyer nominated equipment. And those equipments, we had given already our BQ at that time to both the shipyards. But the formal order from them will now start formally. That may take, let me tell you, 1 day to 6 months. That is a variation because there are different, different line items. For different different line items, there will be different type of so-called negotiation or terms and conditions finalization, etcetera. So I can't tell you exactly when I will have last order of NGC. But technically, it may start even tomorrow also. The first order may come even tomorrow also, which is -- which will be very small value, but small value to big value, total, I'm expecting within next 6 months, before this financial year closure, all these orders from both the shipyards will be there with us. So tentatively, we had, I think, indicated around INR20,000 crores worth of orders. We are sticking to the same value only. Based on our estimate, our discussions with these 2 shipyards, I think we may get order of this tune only. So, around INR20,000 crores to be worth of orders we are expecting in a staggered way, but all of them,

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99%, will come in this financial year. As of now, it looks that there will be no slipping of one- or two-line items. But again, we hope that even for QRSAM also last year, we may get by March, but some slippages because of procedural terms, conditions, some discussions happens, etcetera, happen. So maybe 1- or 2-line items may slip. But as on today, it looks like all the line items of NGC, we may get order before March. Mahesh Raut:

Understood, sir. My second question is pertaining to execution growth. Given that we have mentioned in annual report that we will grow at about 15% to 20% in FY27 at top line. And given we have achieved 26% growth in H1 FY27, would there be any upgrade in guidance for FY27 in terms of revenue and even at the margin level?

Manoj Jain:

No. Let me tell you, the thing is although the growth looks 20-plus percent overall still H1, but that is based on our strategy of making as much uniform our production as possible across quarters. You all may be knowing generally, last quarter, we generally performed better. We, not only we, with all other our partners, MSME partners and other partners also, the January to March productivity is a bit more than other quarters, but we are trying to correct it so that we give efforts and our supply chain partner also give full efforts for each quarter by quarter. So definitely, we have done that type of efforts to see that our -- all the 4 quarters are more even. So because of that, it looks 25% and 26% looks very good. But overall, we are planning as of now between 15% to 20%, more than 15% growth. That only we are expecting. If something more comes, it will be a positive surprise for us also. But as of now, we are planning that only.

Mahesh Raut:

Understood, sir. And sir, if you can give us some color beyond FY27 as well in terms of execution growth, how one should look at, especially given that QRSAM contract now got derailed by almost 7, 8 months vis-a-vis our early expectation. So do we anticipate early Page 6 of 32

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recognition from the program in anticipation of this program? Have you started any work and so that we can reduce time line to recognize revenues and we can post probably FY28 itself some part of execution from QRSAM. So, any color on execution beyond FY27? Manoj Jain:

Definitely, generally, these type of discussion we do in April con call, because there we will tell with more quantification about next 3 years, what is our projections. But yes, we review our yearly plans of next 3 years at every quarter also. But the more concrete data we have at that time. But anyway, once you have asked this question on QRSAM, let me tell you, we have started proactively good work on QRSAM, QT and FOPM realization-related activities, knowing the sensitivity of the program and geopolitical situation around. So we are confident that once we get the order, we will try to squeeze a few months, definitely, right, as of now, it looks like at least a few months, we will escalate ourselves. So a few months plus we may get. But overall, how much it will impact our yearly targets, today, it may be too early to tell that. But definitely, we are very, very serious on this QRSAM program execution.

Moderator:

The next question is from the line of Dipen Vakil from PhillipCapital Limited.

Dipen Vakil:

Congratulations on a great execution and margins. Sir, my first question is on the lines of your current order book. Sir, can you help us with the breakup, so slightly detailed breakup of your order book project-wise?

Manoj Jain:

Actually, again, it was already told. We have around 300-plus projects for execution. But only the major projects only, I will...

Management:

Top projects, we'll just tell you. Electronic business is about INR4,200 crores. LCA Mark 1 is INR3,200 crores. LRSAM is INR2,900 crores. BMP 2 upgrade is INR2,600 crores.

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Ashwini radar is INR2,500 crores. Electronic warfare suite for Mi-17 is INR2,200 crores. And one export order is there, which is for INR1,700 crores. These are the major orders on 1st October. Dipen Vakil:

Got it, sir. Sir, my second question is on the lines of order inflow. So, in the first half, the order inflow has been roughly more than INR7,000 crores. So how do you expect second half in terms of ordering to happen and which could be the major projects that you're expecting apart from QRSAM and NGC, which could help us sustain our order inflow above INR20,000 crores or INR25,000 crores?

Manoj Jain:

Yes. Definitely, we are fully confident. Whatsoever guidance we have given to you at the year start, we are going to meet or exceed that. And NGC has come anyway as a big project. But some 3, 4 more projects which are there in pipeline. Shatrughat and Samaghat files have moved considerably well, and we hope to get both the orders one by one before March. And HAMMER also, hopefully, we may get before March. So these 3 orders confident to get. Then some other orders are there, which are smaller value. But P-75I also, I am not sure right now whether it will also be cleared. So P-75I, maybe as per my guesswork, NGC was the first, second maybe QRSAM, third maybe P-75I. So maybe P-75I may slip to next year. I'm not fully sure. But if it comes in this year, it will be a pleasant surprise for us also because we have -- again, there are also a lot many line items are from BEL. But that is brief from my side.

Dipen Vakil:

Got it. So right now, the major orders remains QRSAM, NGC, P-75I maybe next year. And without that also, we are like we are looking at INR15,000 crores to INR20,000 crores order wins?

Manoj Jain:

Yes, yes, yes. So total INR25,000 crores without QRSAM and with QRSAM INR55,000 crores, which was our guidance, we are sticking to that.

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Moderator:

The next question is from the line of Harshit Patel from Equirus Securities.

Harshit Patel:

Sir, just on the first question, just a bit of a clarification. This INR20,000 crores that you mentioned for NGC, this would include MRSAM as well, right? Or this is only the electronics portion?

Manoj Jain:

The electronics portion is radar also. So there is MFStar radar. So that is also part of this, not the missiles. So missiles are excluded, all the electronics and electronics mills, communication equipment, EW equipment and radars. So all put together, the number which I have shared with you, roughly INR20,000-plus crores, we are expecting orders.

Harshit Patel:

Understood, sir. Sir, secondly, on competitive bidding and the nomination share, I believe roughly 90% of the order book right now is on the nomination basis. But we have seen a lot of private players, including Adani Defense also getting active across radars, electronic warfare systems as well as missiles, as you also mentioned. Would you be able to tell us how much of the FY28 and FY29 pipeline will be competitively bid? And how pricing and margins in those bids would compare with the nomination-based orders?

Manoj Jain:

Let me tell you, whether it is nomination or competition, more or less similar margins will be there, okay? In nomination, we don't get higher margins. So how we will win or how we win is based on uniqueness of our product and the indigenization content, which has developed over a period of time in our technology. And that only differentiates us from others. And let me again tell you whatsoever nomination you see today, it was actually started with multi-vendor competition, and we became L1. Then only when the product was good for the next ship or next order, they go for BNE buyer nominated or nomination happens. So hardly any nomination on this domain has happened because of other reasons.

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So it was based on the capability developed over a period of time and indigenization and other benefits which we passed on to our customer also because of that only, we are still retaining some of the so-called nomination status. But definitely, the uniqueness is because of our R&D and our indigenization. The unique solutions for their customized needs, which we have understood over a period of time. So that definitely is a unique selling point for us. And with that, we will be competitive and we will have similar margins. Let me assure you. Moderator:

The next question is from the line of Amit Anwani from PL Capital Limited.

Amit Anwani:

Sir, just one clarification. You said -- so currently, we have roughly about INR8,000 crores inflow. And this year, base order, including Shatrughat, Samaghat and HAMMER, we are expecting INR20,000 crores, INR25,000 crores. So, this NGC INR20,000 crores are over and above the base orders, which we are expecting? And will it be in phases?

Manoj Jain:

No, no, no. NGC order was included in this INR25,000 crores because in the start of the year also, we clearly told, including QRSAM, we will have INR55,000 crores, excluding QRSAM, INR25,000 crores. And in this INR25,000 crores, yes, major portion will be NGC. As I told, if we get all of the NGC orders before March, then definitely, we will give a positive surprise to all of you. But as of now, that I told, 6 months. So from November, December, January, February, March, some order may slip to April also. So that is our estimation. So if that slips, even then we are comfortable with our other orders in hand, we are definitely going to cross INR25,000 crores. But if NGC, all the orders are converged before March, then definitely, we are going to cross INR25,000, excluding QRSAM. So that's why we are retaining our guidance, and we are confident and we are putting Page 10 of 32

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all our efforts to converge on all these line items, including NGC different 8 to 10 line items. So, we are confident, but guidance point of view, we still want to stick to INR25,000 and INR55,000 crores only. Amit Anwani:

Right. So if this happens, then you'll be crossing by large margin if NGC orders come in the next 4 months?

Manoj Jain:

Certainly, certainly, certainly.

Amit Anwani:

And sir, in terms of time line, so what will be the time line for NGC for you, your execution and also time line for the few large orders which you highlighted, which are part of the order book, including the fuzes, LCA, BMP, that will be helpful.

Manoj Jain:

Except fuze. Fuze is only now remaining, I think, 6 to 7 years more. Remaining all orders are next 3 years, typically, 3, 3.5 years only. So all other orders, we are going to execute within that time. And NGC also, I think it is more around 4-plus years, which we will take to execute after getting this order. So depending upon the ship construction plan actually. So it depends upon GRSE and GSL. And I hope they are taking help of so many MSME and other vendors to speed up their so-called production and integration of all these electronic systems. So they may ask us to prepone. So in that case, we may have to supply in next 3 to 4 years. But we are not finding any challenge in production of these line items, because these all line items are well in our production pipeline. So there are no surprises. So in case they wants to prepone it, we can definitely execute it, but that all depends upon in the next few months when we get the confirmed order. With that order only, we will know the exact delivery dates, what they have negotiated with their principal customer and how much they want to pass on to us time lines. So -- but hopefully, 3, 3.5 to 4 years is the maximum execution time line for my NGC orders.

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Amit Anwani:

Right. Second, sir, on drones. So there's been a lot of talks about very strong pipeline. So where are we in terms of -- I think you also talked about working towards counter drone systems. Just wanted to understand how Bharat Electronics is shaping up in terms of the dronerelated products like kamikaze or counter drones. So if you could brief on the drone side and any prospective pipeline we are looking on the drones?

Manoj Jain:

Yes. As you rightly told, this is one of the big business growth area for any company, including BEL. So so many other private sector companies, start-ups are there in this particular thing, but there is a scope for each one of us because type of drones requirement, you might have seen also in the recent conflicts how much and different, different type of drones are required, surveillance-related drone, kamikaze drone, 1,000-plus kilometer drone, 2,000-plus kilometer drone. So those type of things are there, drone over drone, drone catching drone. So like that, there are hundreds of use cases -- including logistics drones, like that. So the hundreds of use cases are there. And in the market, there are very good so-called initial products, I should say. But those initial products have to convert into a reliable supply chain-based product with enough hardening. So BEL is working with lot many start-ups as well as has its own in-house programs to see that we give reliable, trustworthy solutions, which can test the forward area or jamming area type of environment also. So we are working very, very closely with the 6 to 8 start-ups right now. And they have come out with the technology -- great technology, of course. But this type of organization are making it more and more robust, we are doing, and we started bidding also. Few orders we have got this year also, but that orders are of the order of INR50 crores, INR100 crores type of thing. So I am looking at some bigger orders in next 1 year or 2-year time frame of the order, which we can tell in investors call also because INR50 crores, INR100 crores of orders, we Page 12 of 32

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don't want to even discuss in the investors call, and you also may not be interested in those type of things. But definitely, I hope next year, we may get at least 1 or 2 big orders in this based on our 6 to 8 big leads and big tie-ups which we have done with the start-up community. So I'm confident this will yield us very, very good business in years to come. And same thing is about counter drone. Counter drone, luckily, last 3 to 4 years, we have established ourselves as a reliable supplier of highend counter drone systems. So high-end means which is having hard kill options also. In that hard kill option, now we are adding microwave DEW based on our own in-house efforts as well as our DRDO efforts. So that we are adding. We have got very good leads for some of the foreign countries also. We have successfully demonstrated our counter drone solutions, which are quite, quite unique at world level also and very, very cost effective. So we are hopeful to get good export orders very soon because very good development, very good trials were concluded. So we are hoping we may get good counter drone solutions for exports. So overall drone and counter drone definitely is one of the most focused area. After our missile, arms and ammunition, the second most focused area for us is drone and counter drone. And we may give you a very good pleasant surprise during R&D also, we may launch a few products at that time. Let me assure you. Moderator:

The next question is from the line of Pinakin Parekh from HSBC Bank Limited.

Pinakin Parekh:

Sir, my first question, again, going back to the QRSAM. So, of that INR30,000 crores order, sir, what will be the value in your estimate for the core missile manufacturing, which possibly could be opened up to private sector because BEL will not be manufacturing missiles, right? It will be manufacturing the systems around the missiles. Page 13 of 32

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Manoj Jain:

Yes. Definitely, right now, we are not manufacturing big missiles, but a few missiles, we have started manufacturing also, but not QRSAM missile, let me tell you. QRSAM missile was developed by DRDO jointly with BDL. So this question, actually, you should refer to BDL that how they will take this challenge. But let -- based on the available information and public domain, I think their QRSAM missile was not there. They have written some 4, 5 missiles names that these missiles, DRDO is opening up for private sector, which may take private sector also some time to absorb. But I don't think QRSAM missile was there in that list. But anyway, that question, you specifically asked to BDL because as I told, for us, QRSAM is a system of system with large complex radars, communication system, interconnection of all these launchers and missiles. So as of now, BDL is the design partner for DRDO for QRSAM missile. In case DRDO changes their plan or something happens, I don't know as on today. So then that missile capabilities, if others develop, it may be splitted to them. But definitely, at that time, BEL also will come and pitch in because BEL also has, over a period of time, acquired enough knowledge, enough infrastructure for manufacturing missiles. And let me again assure you reasonably good infrastructure there even for QRSAM missile also if government decides, we are capable of manufacturing QRSAM missiles also. But right now, our official LRLACM and Pralay missile, we are the DCPP partner for DRDO, and we expect some orders in future for these 2 missiles. And then there are some 3, 4 more missile programs, which are strategic in nature. So we are just involving ourselves with the design agencies for those. But these 2 anyway had come to public domain also, where we are the formal DCPP partner.

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So definitely, we are putting missiles also as one of our focused area of development because missiles, you may be knowing, actually 60% to 70% of missile is electronics. The cost of missile, 60% to 70% goes in missile electronics. Remaining only goes into other 2 major components. So the biggest component, I should say, of missiles is electronics and where we have proved our strengths now. Okay? Pinakin Parekh:

Got it, sir. Just continuing with the QRSAM program. You mentioned in the beginning of the call that you do not see the private sector, at least in this first INR30,000 crores order to be part of it, maybe going forward. So sir, do you see the QRSAM program or variances of this come through again and again over the next few years as India builds out its air defense system beyond what it is going to be on offer?

Manoj Jain:

Definitely, yes. We told earlier also, this is the first order. Whatsoever we are going to get will be the first order. Like Akash system, you just see the history. The first order, I think, around 20 years back, roughly we got. And after that, we are going to get multiple series orders. We already got some 3, 4 series and 2, 3 more are there because with every 3 to 4 years or 5 years, some technology refresh happens, some extra enhancement happens for the same technology. And there will be based on the political and geopolitical -- sorry, geopolitical situations, there will be requirements for strengthening more and more. And you all have seen the recent conflicts, the 2 hot things in the market, which are required by everybody in the world is drone, counter drone and missiles. So for these 2 markets, definitely very, very big markets are there for these 2 segments. And we are also working seriously to capture as much as we can in these 2 domains.

Moderator:

The next question is from the line of Subramaniam Yadav from SBI Life Insurance.

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Subramaniam Yadav:

Sir, if you can update us on the AMCA project, I believe the

bid submission date was end of October. So if you can give us some color on that? Manoj Jain:

Yes. Why not? AMCA is one of the prestigious project for us. And as we have told earlier also, we have done this bid jointly with L&T, L&T being front ending, and we are giving them full support in a 5050% consortium basis. We have already submitted the bid. And as per our internal estimate, it is very, very competitive bid. So we are hopeful to be L1 after technical evaluation and then the bid will be open, and we are hopeful we will be L1. And that way, we will jointly with L&T, means private sector, it will be a really good model of public-private partnership, which we are really working for this program and many more future programs. We also are now aligned ourselves to this type of public-private partnership. You can ask L&T how their experience is in their investor call. I don't have any issues. But our experience of working with L&T is really great and very, very accommodative. Both sides sat together multiple times. And I hope we have given a very, very optimum solution or optimum bid to the agencies, and we are confident we are going to win.

Subramaniam Yadav: Manoj Jain:

Pardon? Can you repeat?

Subramaniam Yadav: Manoj Jain:

So when can we expect the outcome of this?

When can we expect the outcome from this bid?

Again, it is a guesswork only because that is the other side. The DRDO has to decide on that because as you know, ADA is the agency who had floated this RFP for selecting one of the partner. Typically, again, it is my guesswork. It may take 2 to 3 months of technical evaluation because still we have given a lot of details, technical details for us, and we have given, all 3 of us, different, different consortiums. So because Page 16 of 32

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it is a big project, so I expect 2 to 3 months of technical evaluations and then they may open the price bid. Hopefully, before March, and we may get a positive surprise. Moderator:

The next question is from the line of Jyoti Gupta from Ashika Institutional Equities Limited.

Jyoti Gupta:

I have a couple of questions. One, that following the approval of 8 Next Generation Corvettes, how much of the estimated INR70,000 crores to INR75,000 crores program opportunity could actually accrue to BEL through combat management systems, radars, electronic warfare suites and communication equipment. When should we expect the first order to materialize? And what would be the likely time line? Second is what -- we know that there are a lot of work which is happening in terms of fixing HAPS. So what is BEL's role in the Indian Air Force High-Altitude Pseudo-Satellite program, particularly in communication surveillance payloads because it looks like this is going to be the most important technology in the future? My third question is that in small platforms or contracts that we have received, specifically on the low-level lightweight radar order, which is INR770 crores from the Army, does this radar have additional export potential? And could the program lead to follow-on orders for deployment across additional Army formations? And last is, the INR1,261 crores Ground Based Mobile ELINT System, which the BEL has secured from the Indian Army again. Is this a stand-alone deployment or part of a larger networked electronic intelligence program? And could there be an additional order for similar systems?

Manoj Jain:

Yes. Although you were supposed to ask only 2 questions, but anyway I will answer them. So your first question actually is a repeat question, I should say. I had answered it that NGC different different line items,

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you also mentioned all items beautifully. So it may take 1 day to 6 months. I can't tell right now because we are in discussion with both the GSL and GRSC. And some similar discussion we already had done in March itself. Actually, in the month of March, we thought we may get order. So quite good homework is done. Based on that only, I'm telling it may take 1 day to 6 months of different different line items to convert into confirmed PO on us. Now second question about HAPS. Yes, HAPS is a very good program. Multiple usage will be there. But as per my understanding, it is still maturing. It is not a mature solution. It is still maturing. So when it is maturing and there are multiple technologies. One is even DRDO developing. One is even CSIR lab is developing. Then there are some Indian companies also are there in the race who claimed that they have this capability, but we are closely watching all of them, let me tell you, because I feel it still -- we don't have mature product. This is our assessment. Maybe we are wrong, but our assessment is it is still maturing. So, we are careful in selecting a right partner so that my development risks are minimal and my winning probability is more in that program. So we are in that process of selecting a right partner for HAPS. Regarding INR770 crores project. That project, we are going to execute quickly only. This is technically -- there was similar order earlier also. So based on that experience only, we are confident we can execute this. We strategically don't disclose whether we are going to export any product by name until we get the order. So as such, my side, no comments about whether this radar I can export or not. Okay. I hope you understand that. Same thing is about GBMES. GBMES for Army, we have got the order, very good order. It is very much strategically required. But Page 18 of 32

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again, it's deployment is kept confidential always in this type of EW programs. But let me tell you, all the products which we give are generally very agile, which can meet different type of terrain or other requirements. And always nowadays, we are giving solutions which are networkable. That is our basic thing. Like every product should have AI and every product should have a networkable feature, means it can be networked with a larger system. These 2 features, I think for the last 5 years, whatsoever programs we are developing, at least these 2 features are there in any program. Because without this, in today's war scenario, nobody would like our equipment to be [indiscernible]. So these 2 features are always there in our thing. How it will be exploited or not exploited will be depending upon end user, and that will be definitely a strategic answer, which finally end user only keeps with him. They even don't disclose to us also. How they are effectively using in operation depends upon them. We don't dictate or we don't control that. Let me again assure you. I hope I have answered all 4 questions. Jyoti Gupta:

I just want to ask, could there be an additional orders for this because they don't drive...

Manoj Jain:

For all EW also, actually, EW-related projects, you might be seeing now

very,

very increased

requirement

because

overall,

the

environment, EW-wise also is very, very hostile. And technology has changed so much in the last 5 years also. You might have seen 3G to 4G, 4G to 5G, 5G to 6G. That is only about communication. Same thing is in radar also, technology is changing so fast. EW mainly is for radar and communication systems jamming, mainly.

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Okay. So once the technology has changed, requirement of these type of EW systems is ever increasing now. So once... Jyoti Gupta:

I just want to know, are these agile in hostile -- like the technology is agile enough to interpret or let's say withstand the changing hostile environment? Or does it like it is stand-alone -- how is the development...

Manoj Jain:

Again, you are asking a strategic question, which I will not answer for this project. But I will again tell you, in general, all projects which we are supplying, in general, they are highly agile, highly networkable and highly deployable in different different terrains.

Moderator:

The next question is from the line of Ajinkya Jadhav from Krish Portfolio.

Ajinkya Jadhav:

My first question is regarding an MoU that BEL has signed with MIDHANI and BEML for advanced steering and control system for heavy-duty combat vehicles. So what status on this program? And has it moved from the developmental stage to the commercial procurement?

Manoj Jain:

This was a very, very challenging futuristic project, let me tell you, developing this type of a critical technology, where our portion was mainly electronics. MIDHANI portion was mainly materials and the BEML portion was mainly the basic so-called engine control. So we had done our first level study and found that we are capable of developing this as a technology. But this technology requires much more larger investments. And that investments are possible with some investment from our side and some in the form of grants. So we are just sitting together, all the 3 companies, and how to fund this project because when the large investments are there, although technology has to be developed, but we are looking at some technology development funds or some other funds from Government of India for developing this critical technology. Right now, it is in that phase of Page 20 of 32

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finalizing. But technology understanding, complexity and what type of investments are required, that homework jointly, we have completed. Ajinkya Jadhav:

Got it. And my second question is regarding the indigenization of the materials that we require. So are there any special alloys or steels that we still import that can be indigenized with the help of MIDHANI, the local player? So is there any scope we can increase the percentage of indigenization with help of local players for the RM procurement particularly?

Manoj Jain:

I understood your point. But again, this point is more related to HAL and other companies, even shipyards because they actually use these materials much more. For us, electronic material is more important than the so-called mechanical materials like steel or alloys, etcetera. Hardly in our product, 1% or 2% is the material cost of these types of things because ours is mainly electronics. So -- but whatsoever small requirements which we have, always it is shared with MIDHANI. And most of this is shared on the SRIJAN portal also. So that indigenization can be done for that. But because our volumes are not much -- so I don't know whether -- what priority private sector or MIDHANI is doing for that. But as such, this is not very, very critical. For electronic system, these mechanical subsystems are not that critical. There are multiple alternates available for us. But like for engine, engine material requirements are much, much tougher than socalled my electronic packaging material. For me, mechanical items are more of packaging or system engineering-related role they play. But in an engine or in an aircraft design, their role is 10x more. So the challenges for this material indigenization right now is shifted to -- for us is electronics material indigenization. And remaining, we have left to MIDHANI and private sector through SRIJAN portal.

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Ajinkya Jadhav:

Got it. And one more, if I can, is on the NGC, what will be the new suit of a sensor versus the earlier corvette that we will be supplying in terms of sonar or radar, if you can throw some light on that new systems that we will be sitting in?

Manoj Jain:

Let me tell you for every new program, some delta changes always happen because technology is changing. Electronics, defense electronics technology changes so fast that some delta changes will be there. So product name looks the same for you. But within that, there is a technological upgradation or some extra value addition, which keeps being done. So we can't say it was the previous order, same only we are manufacturing. No. There are some delta changes based on the requirements. And that is a continual activity. So -- and all type of EW sensors, radar sensors, communication equipment are there as part of every ship and here also, it is there. So type of equipment looks same. But technology-wise, there is continual upgradation from program to program.

Moderator:

The next question is from the line of Mohit Pandey from Citi Research Private Limited.

Mohit Pandey:

The first question is on QRSAM. Sir, given there has been a delay, is it possible that the actual size of the order could be greater than INR30,000 crores? Because I understand the INR30,000 crores number was first spoken more than a year back and costs have increased in the interim. Is that how it may play out? Yes.

Manoj Jain:

Generally, we also wish like that, that they give us escalations after the conclusion of price. But typically, as a government process, 1 year, 1.5 years escalations, they don't give. Until, because of various reasons, the project delays too much, and we have to absorb that. So mostly, we may not get any escalation, maybe barring if we are lucky, maybe some 6 months escalation, if they clear very good, that will be a Page 22 of 32

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positive news for you and me. But as of now, I'm expecting INR30,000 crores order to come to us. Mohit Pandey:

Understood, sir. Sir, second question is around the missiles that you mentioned earlier in the call. So I understand you are having an old MoU with Tamil Nadu Industrial Explosives and MIL as well. So are there plans to enter into ammunition or explosives also for the missiles? Yes.

Manoj Jain:

Yes, yes, yes. We have formally declared ourselves, and it is coming in our annual report also. This Tamil Nadu Explosives Limited is now owned by BEL. For the next 30 years, at least it is there with BEL. So, we have already done good investment there. And some of the missiles integration activity, we have started there also. So -- and definitely, we have a very good understanding with MIL also, of course, so that some of the support for ammunition because in Tamil Nadu Explosives Limited, we have only a hot integration facility, not the ammunition. We are having ammunition integration capabilities right now. Ammunition making facility, we don't have as of now. And for that, we are depending on MIL and Solar and so many other companies have come up now. 2, 3 more companies have come up in private sector also who can give ammunition to us. And we are having very good understanding with a few of them. So ammunition per se, we are right now, not there. But if strategically, it is required and business demands are there, we can develop that expertise because reasonably, we have some knowledge on that also. But as of now, our main focus is hot integration, means ammunition integrating within the missile. That itself is a great technology and a lot of safety and other security features and infrastructure is required for that. So presently, we are more focusing on that instead of developing ammunition per se.

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Mohit Pandey:

Understood, sir. And sir, last question is on the execution, 26% revenue growth despite a tough base. Any particular reason that has led to such a fast execution despite the order book being -- order backlog being down Y-o-Y. Yes, that would be the last question.

Manoj Jain:

Okay. No, no order book, we are not worried right now because as we have told INR68,000-plus crores we are having, and hopefully INR55,000-plus crores we are going to get before year-end. So order book, we wanted to execute as much as we can. And let me tell you some of the -- we have now started our on-time delivery score. We are improving a lot. And whatsoever we had committed to our own users, we are preponing by another 1 month, 2 months type of thing. And that's why you have seen this thing. And secondly, which I told earlier, we wanted to correct ourselves to give more uniform output across each quarter. So that correction also we wanted to do instead of loading ourselves in the last quarter and then having suspenses for all of you also. We wanted to make it more uniform. So it is more of a correction of that as well as our fast execution speed. We don't want to delay now. Whatsoever delivery commitments are there. We wanted to extend 1 or 2 months this side only. We don't want to go to another side. And we are putting all our efforts to see that our execution track record closes to 100% as early as possible.

Moderator:

The next question is from the line of Atul Tiwari from JPMorgan.

Atul Tiwari:

Just one very quick question. I don't know whether it has been discussed. QRSAM obviously has been delayed multiple times now. So any color on what has caused the delay? And are we still on track to get it over the next couple of months before this financial year closes?

Manoj Jain:

No, delay is not that much. We were optimistic last year, we told if we are highly optimistic that we may get by March. But we knew in the month of January, February itself, the type of complexity of the Page 24 of 32

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documents itself, which was very, very huge, it may spill over. But as CMD, I was optimistic and as I am always. But the thing is, internally, we also knew it may be minimum August, September only. So it has not slipped that much. But yes, I was expecting in the NGC type order, we may get QRSAM also. So anyway, when big, big orders are there, it takes its own time for the decision-makers also. So they have to sit together for each project one by one. So we are hopeful in next years, we may get positive surprise. So we are not alarmed by the delays right now. And anyway, as I told, we are compensating some of the delay by doing some advanced action for the FOPM realization for which we have done some good proactive investments related to QT and related to realizing this with our supply chain partners also. Actually, let me tell you, in this particular project, we have got very, very good support from our supply chain partners, whether they are from public sector or whether they are from private sector, whether they are big private fellow like L&T or a small MSME vendor, they all are investing on their side itself so that the FOPM realization, the first of production model realization is done ahead of time. So that itself is a very, very good news for all of us that, yes, in this program also, it is, again, a good model of a public-private partnership where in this, the private sector, maybe around 200-plus MSME partners will be there and roughly around 70% of the orders which we are getting will be distributed across these 200-plus MSME partners. And right now, they have done reasonably good investment from their side also. So based on this good ecosystem and good confidence they have on all of us, I am hopeful that this few months delay in acquiring order will not translate into execution. The execution, we will be even faster than the expectations of users.

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Moderator:

The next question is from the line of Sahil Karia from Whitepine Investment Management.

Sahil Karia:

Sir, could you please give us some color on the Virupaksha order that is going to come? Like what are the time lines and what amount of order are we expecting?

Manoj Jain:

Yes. Again, this order we have got as a development order only right now. Production orders will take time because I think overall sanctions proving a radar in an aircraft is really a good challenge, let me tell you. And that challenge is not only for Indian companies like HAL or LRDE, it is equally applicable for even foreign companies also. So toughest -- let me tell you, because I'm also R&D engineer, toughest is airborne platform qualification of any technology. And radar, which is a very, very, very critical sensor for airborne platform of Su-30 or LCA type, it takes its own time. So right now, we are just executing that development order and giving our AAAU to LRDE. And then integration and other things will be done by them. So overall time lines are being decided by LRDE for this program. And we are confident maybe around '28, '29, we may get production orders for this radar.

Sahil Karia:

Okay. And the next question is on the missile seekers that we manufacture and develop. So could you just give us a list of all the missiles for which the seekers are being supplied by BEL? Because I believe for some key missile programs like BrahMos and all, BEL doesn't supply the seekers. And also for the ATGMs that we manufacture indigenously in India. So could you just give us some color on that? And what is the quantum of orders that we can expect going forward?

Manoj Jain:

Yes. Seekers are of 2 types mainly. One is RF and one is IR. So we are in IR and RF, both type of seekers, let me tell you. But as you had observed rightly that we are not there till date in BrahMos seeker. Page 26 of 32

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We are there in some other missile seeker programs like Akash, Astra and others, but not BrahMos, but we know the technology for BrahMos seeker also. So proactively, we had started developing that seeker also because they are in different bands, different sizes, different specs are there for each and every seeker program. But we have now capability to develop ourselves these seekers because you may be knowing present seekers were actually designed by DRDO. They were our guru, but system engineering and some of the critical components in BTS mode was developed by BEL. But over a period of time, we have developed good confidence to have these type of seekers end-to-end by us. So we are doing -- if I'm not wrong, ATGMs typically have IR seekers. So IR seekers are again used for various applications. And we have very good strength in designing IR seeker, although, of course, our first IR seekers are again from DRDO, but we are developing strength for developing our own IR seekers also. And we have a very good manufacturing setup for these IR seekers at our new factory in Machilipatnam, near to Machilipatnam, Nimmaluru. So there, we have created a very good state-of-the-art I4.0 compliant infrastructure for these IR seekers manufacturing. So overall, we are increasing our role for different type of missile programs, both type of seekers, DRDO designed, DRDO designed and upgraded, and our own design. All these 3 things, we are there. And let me tell you, seekers also, mostly in many of the missile programs have 20% to 30% of the cost of the missile is actually seekers, very, very critical, most costliest component. So we are eying a high business volume. You may be knowing for missiles and drones, as I told, huge requirements are there in India and even abroad also. And each missile nowadays will have seeker. So seeker also, if you have missile

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business, if you estimate x, typically 0.2 to 0.3x will be the seeker business within that. That much only I can tell you. Sahil Karia:

So just a follow-up on that. So like what could be our capacity of seekers? Like, how many seekers can we manufacture at our facilities in a year? If you could just give us...

Manoj Jain:

Combined IR and RF seeker, 1,000 plus we can make easily right now. And if need arises, we can scale it up if required to 2 to 3x more. Because as you may be knowing, seekers are like radar. RF seeker is like radar, IR seeker is like my IR camera. Technically, technology is more or less similar. So we have good technological understanding of this subject. And because we have a large infrastructure for radars and for IR-based sensors, which can be converted very quickly to the seekers requirement. So as such, infrastructure-wise, we are not having any bottleneck for both type of seekers program. But as and when need arises for scaling up, we are ready for that. We don't see any challenge. But right now, combined strength of 1,000 plus, we definitely have.

Sahil Karia:

Okay, sir. Okay. And just if I could squeeze one more question. Like do we expect any good amount of orders in the EOIR segment for the drones and as well as like for the direct energy weapons that we are developing?

Manoj Jain:

Yes. EOIR also is always a very, very strategic and good technology to be there. And we have developed over a period of time, a very good strength for EOIR. As I told, these are required for seekers. It is required for cameras. It is required for drones. It is required for multiple places. So we have various programs how to increase our presence in this EOIR segment. Critical technology is in our control, except detector. The basic

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detector still is not totally in our control, which jointly with DRDO, we are working. Very good progress has been done for the basic detector. But barring the detector, all other subsystems, signal processing, optics, we have very, very good strength. So we can make multiple type of solutions based on this so-called critical technological components. So I don't see any challenge in that. But yes, detector, there are challenges, which we are overcoming jointly with DRDO. Sahil Karia:

And sir, on the DEW weapons, like are we into RF DEW, like HPM, high-power microwave weapons or laser weapons, like which type of weapon are we developing for the direct energy?

Manoj Jain:

Both. Both type of weapons we are developing, microwave as well as laser-based. Laser, the original technology is from DRDO and microwave also right now, the technology is from DRDO only. But we are exploring other options, including our own in-house options for developing different type of DEW weapons. Because again, it is an ever-changing field. Every 6 months, some new technology comes. So we thought -- although we are supporting our DRDO friends very well, but why not develop some in-house strengths also. So some of the proactive R&Ds we have taken both the domains with our own in-house teams, as well as we have seen some of the good start-ups also have come up in these 2 niche technology domain. So we are working jointly with them also. So overall, we have all the 3 approaches, and we are confident that some good solutions we will immediately offer to our customers other than what we have already offered to them.

Sahil Karia:

Okay. And do we see any orders coming in or any...

Moderator:

Sorry to interrupt, Mr. Karia, I request you to join back the queue for more follow-up questions. The next question is from the line of Mahesh Raut from Nomura India Limited. Page 29 of 32

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Mahesh Raut:

Sir, my question is pertaining to more of a strategy that probably Indian forces can adopt given that probably in future or currently as well, we are seeing multiple cybersecurity-related threats in other sectors. We have supplied very large installed base of defense electronics products historically to all armed forces. So how do you see this opportunity in medium to longer term kind of panning out for BEL? And at the same time, probably if you can also give us color on possible upgradation of IACCS system that Indian Air Force is looking for and expansion of IACCS further north as well.

Manoj Jain:

You told you will ask one question, but actually, you asked 3 questions. Anyway, I will try to answer as much as possible because it is the last question. Cybersecurity, as you have rightly told, it is need of the hour. But as a technology, we understood this need at least 25 years back. And we opened basic research on cybersecurity at our Central Research Laboratory 25 years back, we had created group, and they started developing niche technology, which are underlying technology for this domain. Today, whatsoever C4I solutions, which are in field, the cybersecurity component of that is developed in-house by BEL. Let me assure you that. But there is a good, good requirement of the cybersecurity solutions for nondefense also. So defense, let me tell you, we have very good solutions, which are already in place. But nondefense, because the technology is changing, because the networks are evolving for nondefense critical infrastructure, so many. So there how we are focusing as an extra focus or as an extra business opportunity. And that's why we created this new SBU itself, Network and Cyber Security as a separate SBU in our Bangalore complex some 2 years back, now 2.5 years back.

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And they started giving very good results in so-called civilian domain also cybersecurity-related things. We have got good orders. I think right now also, we are executing something like INR400 crores to INR500 crores worth of orders in the cybersecurity civilian domain and opportunities or good leads which may convert into a good business of thousands of crores in the pipeline. So, we know the importance of cybersecurity for civilian domain. And defense domain, it doesn't go as a line item, but it goes as an in-built package for our C4I solution, as part of our C4I solution. So, we are definitely in that domain. And definitely, there is a good growth prospectus for that. IACCS next version, I want to avoid the answer because it is strategic in nature. That's why I -- but let me tell you what our users are expecting for future IACCS, we have developed those critical technologies already. Okay. I hope I have answered whatsoever I could. Moderator:

As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Manoj Jain:

Yes. Our closing comments is the same as our starting comments of the year. We are going to meet our guidance given at the start of the year. We are working for that revenue growth of 15-plus percent, although there may be some positive surprises as you have predicted. But right now, we are confident we will have 15-plus. EBITDA margins of around 28%, the order inflow of INR25,000 crores minimum, excluding QRSAM and including QRSAM, INR50,000-plus crores. R&D investment of INR2,200-plus crores, capex of around INR1,200 crores. And defense to nondefense business, typically 90:10. So we are going to meet this guidance which was given, we are confident to meet that guidance. Thank you from my side and my team of Director, Finance and our Company Secretary.

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Moderator:

Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

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