The Ministry’s first and second lists indigenize 101 and 108 items respectively. “In the number of possible order entries, Bharat Electronics also leads this (third) list with 24 likely order accumulations,” ICICI Securities analysts said in an April 8 report.

“A higher capital budget and greater push towards indigenization will allow for better visibility of backlog and execution over an extended period, and better working capital dynamics. Both are recipes for yield ratio improvement and multiple expansion,” the brokerage said.

At the end of FY22, Bharat Electronics’ backlog grew to ₹57,000 crores, an increase of about 7% over the previous year. Among the main orders obtained are the avionics package for light combat aircraft, the advanced electronic warfare suite for fighter aircraft and the instrumented electronic warfare range.

Even so, based on preliminary numbers, revenue disappointed a little with 8.5% year-over-year growth for FY22, below the company’s 10-12% growth forecast due to supply chain constraints. Bharat Electronics’ turnover of ₹15,000 crore was 4% lower than JM Financial Institutional Securities’ estimate.

Sales growth is expected to increase given the strong backlog, the government’s focus on local manufacturing, and opportunities in non-defence areas such as batteries and lithium-ion cells with an evolving of the automotive industry towards sustainable options.

Investors cheered the growth outlook, with the company’s shares up 16% year-to-date.

“The environment that compels India to prepare amid geopolitical tensions is one of the factors behind the recent rally of Bharat Electronics. The company has been at the top of the defense manufacturing chain. Moreover, with all possible variables such as profitability, exports, etc. in great shape, there is room for medium to long-term earnings growth,” said Amit Mahawar, analyst at Edelweiss Securities Ltd. The data from Bloomberg show the stock is trading at nearly 20 times estimated earnings for FY24. All eyes will now be on execution.