Bharat Electronics Limited (BEL) has secured orders worth Rs 5,498 crore from the Ministry of Defence (MoD) to supply defence equipment to the Indian armed forces. The news has boosted BEL’s shares by 6.4% in early trading.

The contracts cover a range of defence equipment, including Electronic Warfare Suite Equipment for Medium Lift Helicopters, an Automated Air Defense Control and Reporting System, and an Instant Fire Detection and Suppressing System IFDSS for T72.

Of the 10 contracts signed between the MoD and BEL, two are air force projects, two are army projects, and six are navy projects. The contracts are part of the government’s “Make in India” initiative to boost domestic defence manufacturing. The contracts will enhance India’s defence preparedness and expand indigenous design and manufacturing capabilities in the defence industry.

According to Jefferies, BEL’s order book of Rs 50,100 crore, 2.7 times the FY23 revenue, provides visibility over FY24-25. The investment bank believes that the recent orders bring BEL closer to the FY23E Rs 20,000 crore guidance, with unannounced orders expected to add to this. Jefferies maintains its ‘buy’ call on BEL’s stock with a target price of Rs 125.

The contracts signed between the MoD and BEL involve other public sectors, private sectors, and MSMEs, showcasing the indigenous design and manufacturing capabilities of the Indian defence industry led by BEL. The contracts will add another milestone to the “Atma Nirbhar Bharat Abhiyan” and “Make in India” initiatives of the Government of India.

BEL’s consolidated net profit for the third quarter ended December 2022 increased by 2.87% YoY to Rs 613.01 crore from Rs 595.86 crore in the same quarter last year. The revenue from operations grew 11% to Rs 4,064.9 crore compared to Rs 3,660.84 crore reported in the third quarter of December 2021.

The contracts reflect the government’s focus on boosting domestic defence manufacturing in the country. Union Minister of Defence, Rajnath Singh, announced last month that 75% of the defence outlay or around Rs 1 lakh crore would be spent on procurement from domestic defence manufacturers beginning FY23-24. In the union budget for FY23-24, the government allocated Rs 5.94 lakh crore for the Ministry of Defence, which is 13.18% of the country’s total outlay of Rs 45.03 lakh crore.