Q1 framed Israel-Iran shock + AI/ML posture.

Are these NGC orders included in your guided number for FY26?

Yes, around INR 3,000 crores to INR 4,000 crore is included in the FY26 guidance because we expected this conclusion. We are confident of getting INR 3,000 crore minimum this year as it is included in our guidance.

On margins, EBITDA is around 30% this quarter with other expenses down 15% versus 24% top-line growth - any one-off in other expenses in Q3? And for 9 months EBITDA is 29%, much higher than 27% guided - are you expecting major outperformance for FY26?

We maintain the EBITDA margin of 27% as guided for the current year because composition of products varies. Up to December our mix was favorable; from January to March composition will be slightly different. We maintain 27% EBITDA margin for FY26.

Pertaining specifically to the third quarter, why are other expenses declining by 15% year-on-year?

Cumulatively, other expenses have increased only. For Q3 last year provisions were slightly more, leading to a quarter-on-quarter decrease in current year due to lower provisions. Overall cumulatively for 9 months total other expenses have increased.

On execution pace in defense electronics - are there delays in project deliveries due to supply chain constraints or approvals, and how are you mitigating?

Supply chain management is our real job and we are closely watching it. This year we are targeting around 95% items delivered on time and next year 100%. There are constraints around semiconductors, rotary joints and critical items not made in India, but we foresee them early and mitigate so customer delivery is not affected.

9M is strong and we will exceed top-line guidance and have given 13-15% growth guidance for next 2-3 years. To sustain this growth you would need INR 30,000 to INR 35,000 crore intake. Are there medium-to-large orders expected in next 12-18 months apart from QRSAM?

We have committed 15%+ growth for next 3-4 years based on expected orders in pipeline. There are many projects beyond QRSAM in pipeline of more than INR 25,000 crore minimum next year. QRSAM itself we are 90%+ confident of getting this year, which adds INR 30,000 to INR 32,000 crore. So minimum INR 25,000 plus crore additional is already pipelined for next financial year.

On NGC clarification - INR 3,000 to INR 4,000 crores is roughly 25%, so the remaining INR 10,000 to INR 12,000 crore will probably come in H1, is that the right understanding?

Yes, correct. We will try to get it in Q1 of next year but it may spill over to Q2 maximum. So in H1 of next year we are hopeful to get the remaining INR 10,000 to INR 12,000 crore.

Recently there has been talk of semiconductor chip shortages and prices going up significantly. Are you seeing impact on bill of materials? What percentage do semiconductor chips comprise?

Semiconductor chips are very important but knowing the shortage we made design efforts for alternate designs, so today we are not feeling that hit. We have around 2,000 plus types of semiconductors in our project portfolio. We are indigenizing critical chips, have done microwave-related chip designs and signed MOUs with all upcoming Indian fabs.

As a percentage of COGS how much is the chip cost - just a broad estimate?

Out of the bill of material, around 20-30% typically will be semiconductor chips. The remaining is assembly, mechanical components and testing.

Can you break down the Q3 revenue by execution platforms?

Up to Q3 the major orders executed include LRSAM project, HimShakti Project, Battlefield Surveillance Project, Lynx Fire Control Solution, Akash Army, LRUs for LCA Mark 1A digital LRUs, and Shakti EW system. These 7 projects together accounted for around INR 5,000 plus crore.

For Q4 what are the major platforms for execution?

Q4 execution will include LRSAM, Akash Army, HimShakti, Arudhra MPR, D29 EW system supplying around INR 500 plus crore, BMP-2 upgrade, and LRUs for LCA. These 6-7 major projects will deliver around INR 4,000 to INR 5,000 crore in Q4.

On the Akash missile program with BDL as lead integrator and we supplying - why have you not included Akash Next Generation in near-term pipeline? What is the size and timeline for this large project?

Akash Prime is what we are executing now where BDL was the lead bidder. We will execute more than 90% of that order before this financial year. Akash-NG trials are completed and AoN approval is pending. We may not get a confirmed order in FY27 but FY28 is planned. If lucky we may get in Q4 of next year. The size estimate is INR 2,500 to INR 3,000 crore.

Will BEL be the lead integrator for Akash-NG and not BDL?

Akash Air Force is led by BEL while Akash Army is handled by BDL. Akash-NG requirement is from Air Force, so BEL is the lead bidder for this. For QRSAM Army and Air Force both, BEL is the lead bidder. BEL will have a back-to-back arrangement with BDL for the missile portion.

There seems to be delay in order placement for Shatrughat and Samaghat electronic warfare systems which have been in development a long time. Any reason for slow movement and when do you expect orders?

Both projects had small delays due to rigorous trials but that phase is over. Trials concluded successfully with DRDO as lead supported by BEL. RFP was issued and we have responded; cost audit also done. We may get one of the two programs - Shatrughat - by Q4 this year. Otherwise both programs will come in H1 of next year.

Based on guidance of around INR 27,000 crores order inflow with EP approved, we are looking at balance of INR 8,000 odd crores. Which programs constitute this balance INR 8,000 crores?

Mainly LCA order from HAL we expect very soon as price conclusion is done - that is the biggest order this quarter. NGC and Shatrughat we hope to get this year. There are 2-3 more bigger orders of around INR 1,000 plus crore each, and we are confident of crossing INR 27,000 crores without QRSAM.

Could you indicate the size of the major orders - for NGC you mentioned INR 3,000 crores in current year but for Shatrughat and LCA LRUs, any indication of size?

Shatrughat will be around INR 3,000 crores and the LCA order will be around INR 2,400 crore plus, roughly.

On the provision write-backs you mentioned this quarter, what is the size of these provision write-backs?

Provision write-back done is overall INR 256 crores.

On QRSAM - could you break down the total project cost into key components and key suppliers? For instance, missiles go to BDL. Quantify order values for vehicles, launchers, etc. and how much will be handled by BEL in-house?

QRSAM is a complex project with various big subsystems. Missile is the largest subsystem and goes to BDL - the missile order itself is around 30% of total order value. The remaining 70% will be executed by BEL with our large ecosystem of industry partners. BDL is the largest partner. In-house quantification will be given once we have confirmed orders with exact quantities.

On exports, any key export opportunities you see over next 12-18 months?

Export opportunities exist across all areas of BEL operations. We aim to grow exports from currently 3-4% to 5% in near future and 10% in long term. New orders in Q4 are expected from Satellite Communication Equipment, TR modules from France, Data Link projects and operationalization of Coastal Surveillance systems for various countries.

On non-defense side, medium-to-long-term aspiration is 10:90 mix between non-defense and defense. Any key incremental opportunities materializing in next 12-18 months?

Currently non-defense is 6-7% and we want to cross 10% in near future and 15% beyond in long-term. Railway and Metro segment with KAVACH program, CBDC program, PSD platform Screen Doors are key drivers. Airport Authority and aviation sector with HAL and ATM systems, plus space partially non-defense and cyber security/data center business will help us cross 10%.

On the data center opportunity - can you elaborate on what exactly is the offering? An order has been won this year as well?

Orders won are a few hundred crores, which is not our aim. Our aim is to give a secure data center solution combined with AI cyber security and other components in a comprehensive package. We aim for INR 1,000+ crores from next year onwards in data center business and are working with start-ups for unique solutions in AI.

Who are the target customers - government data centers?

Mostly government only - state government and central government related activities. We do not want to go to general public, private and OEMs. We have good leads in various state governments.

On margins - if commodity costs around copper, aluminum, silver move, what kind of impact on margins in coming quarters?

We are not anticipating much impact because BEL is a semiconductor or electronics company where these metals do not impact much - maybe 5% of materials. MIDHANI or other companies may be affected but not BEL. Our risk is from semiconductors where we have already mitigated.

On semiconductor price variation clauses - are you able to pass on unexpected increases to end customers?

Yes, we have ERV clauses (exchange rate variation) in most orders with defense forces, which indirectly covers all the semiconductors as well.

Most defense orders are on nomination basis with similar margin profile - how does product mix impact margins, is it because indigenization levels are different across products?

Indigenization levels are different - some products have 50-60% content, some 80%, some touching 90%. Some projects we add value of 30-40% while in others we are system integrators with less value addition. With over 350 products and complex systems calculation of margins is a complex AI algorithm done quarterly.

On overall and aggregate basis what is the indigenization level now - any ballpark number?

Indigenization varies from 50% to almost 90%+ in some programs. On average it may be around 70% to 73% overall indigenization level.

Can you provide a break-up of your current order book of close to INR 73,000 crore - what would be major orders in the order book?

As on 1st January 2026, the major order book consists of electronics for users, LRSAM, BMP-II Upgrade, Akash Army, Ashwini Radar, MPR Arudhra Radar and EW Suite for Mi-17 V5. These seven projects constitute around INR 20,000 plus crore. The first project is for 8 more years; LRSAM has 1 to 1.5 years of execution; BMP-II and others are typically for next two years.

For smaller value orders less than INR 1,000 crore that come on recurring basis, what is the likely execution period?

Those orders typically are 12 to 18 months, sometimes 24 months. Less than 24 months for these smaller orders typically.

On the AMCA project bid in conjunction with L&T - where are we in that process? When can we expect movement and selection of the partner who will make products for AMCA?

We have partnered with L&T and L&T is the lead bidder. We submitted EOI response which is being evaluated by a high-powered committee in MoD. We are confident of being a selected bidder and expect RFP around mid-February. Based on the strengths of BEL and L&T, we are confident of being the strongest bidder.

On large orders - except QRSAM and NGC, what are large orders expected over next 2-3 years?

Multiple programs are in pipeline. The largest is Kusha program - the indigenous S-400 - which is similar to QRSAM order size. Kusha order may take three years - around FY28 or FY29. In addition there are 8 to 10 big programs of INR 3,000+ to INR 4,000+ crore expected next year and the year after. R&D phase is over for many.

On other expenses for 9M FY26 vs 9M FY25 - could you quantify the extent of non-linear provision in other expenses?

Other expenses for 9 months increased from INR 158 crores to INR 280 crores. The major reason is provision towards doubtful debts which is around INR 110 crores increase. Total provision is INR 709 crores current year as against INR 598 crores last year.

On other income - the other income for the 9-month period is down. How is your cash position and what element of treasury decline explains the other income decline?

Interest income decreased from around INR 472 crores to INR 416 crores due to decrease in interest rates and average yield on deposits. Last year there were some FE gains not present now since rupee has depreciated. Cash position is reasonably good at INR 14,000 plus crores.

On CAPEX given participation in many programs - how should we look at R&D expenditure going forward as this should go up?

Total R&D expenditure (revenue plus CAPEX including test instruments) was INR 1,468 crore last year. This year target is crossing INR 1,700 plus crore and next year it will be more than INR 2,000 crore. We aim for almost 20%+ year-on-year increase. R&D engineers are 3,200+ with 700-1,000 added in last year. R&D investments will increase minimum 20% YoY.

In larger programs post FY27, what is the visibility - what kind of pipeline are you working to maintain INR 25,000 to INR 30,000 crore order inflow over next 5 years?

There is a big list of around 30+ items each minimum INR 1,000+ crore business in next few years. Kusha is one such program where good investment is done and we expect it to be another QRSAM. These big programs plus smaller INR 1,000-INR 4,000 crore orders will take care of growth above 15%.

When new orders like QRSAM and Kusha start executing - is it fair to assume margins will dilute since indigenization will be at lowest level initially and ramp up over time?

These programs are 100% indigenous (except ICs and semiconductors). Overall indigenization in this program is good, however we play higher-end system integrator role and profit will be shared by industry partners and MSME partners. So we may have slightly lesser margins but overall projects will be profitable.

Indigenization is slowest in airborne systems. What specific components are still imported and what is the roadmap for substitutions? How are you leveraging DRDO partnership to accelerate indigenous development in sensors, radars and EW systems?

DRDO is continuously developing sensors, EW systems etc. but airborne testing and certification takes time. More than 70-80% of airborne sensors are now indigenous; some are still foreign because already tested in other platforms. We are at 70%+ indigenization but bridging gaps via own efforts plus DRDO plus industry partners. Programs are running at BEL, DRDO and partners to attack airborne segment jointly.