HAL and BEL: Understanding Order Books, Execution and Revenue

Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited (BEL) have sizeable defence order books, but the pace at which these orders convert into revenue can differ based on the nature and execution timeline of contracts.  

This article explains how to assess order book coverage, book-to-bill, revenue conversion, order pipelines, and the factors that can affect backlog execution for HAL and BEL. 

Order Book Coverage vs Revenue Conversion  

Most results-day coverage of defence PSUs opens with the order book. I understand why. It's a big, clean number. But a backlog only tells you how much work the government has handed over.  

How quickly that work shows up as revenue is a separate question, and it's usually the one the market ends up pricing. The first thing I do is divide the order book by the past year's revenue. HAL closed FY26 with orders worth Rs. 2,54,538 crore on its books. Management reckons that covers seven to eight years of sales.  

Bharat Electronics Limited's backlog of Rs. 72,258 crore works out to about 2.6 times FY26 revenue. So, does HAL win on coverage? Not really. A large part of its book is long-cycle aircraft and helicopter work.  

Take the Prachand contract, first deliveries are only due in FY28, and execution then stretches over roughly six years. BEL mostly sells radars, electronic warfare kits and communication systems, which move from contract to invoice much faster. A bigger multiple can just mean a longer wait. 

What's Actually Converting 

HAL has more orders than it can deliver right now. The bottleneck is supply, especially engines for the Tejas Mk1A, which explains why FY27 revenue growth is guided at only 10–12%. The dependable part of the business is repair and overhaul. Management expects the aircraft already flying to generate close to Rs. 20,000 crore of fresh work each year. One footnote: prices on some deliveries haven't been settled yet, so HAL is booking them at older rates for now. With BEL, I watch book-to-bill, which compares new orders with revenue. In Q1 FY27, fresh orders came to Rs. 3,750 crore, roughly half of last year's level, while revenue was Rs. 5,533 crore. The ratio fell below one and the backlog shrank 3%. Management's explanation is that last year's first quarter had been boosted by orders carried over from March. 

The Pipeline 

HAL expects around ₹90,000 crore of orders over two years. The largest piece is 143 ALH helicopters for the Army, with upgrade work on the Su-30 and Do-228 fleets adding to it. At BEL, a lot rides on QRSAM. It sits within the FY27 inflow target of over ₹55,000 crore, and when the company spoke to analysts in July, the contract was still waiting for CCS approval. Project Kusha is a longer story: potential orders above Rs. 40,000 crore, but execution likely only from FY29–FY30. 

In the Q2 numbers, I'll be watching four things. The first is the order book-to-revenue ratio. The second is quarterly book-to-bill. The third is how much of the backlog falls due within two years. The fourth is whether QRSAM finally gets signed. A big order book is comforting, but I'd still rather see it convert. 

Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice, a recommendation, or a solicitation to buy or sell any securities. The views, analysis, and information contained herein are general in nature and do not take into account the individual investment objectives, financial situation, risk appetite, or specific requirements of any particular investor. Readers should conduct their own research and evaluation and, where appropriate, seek independent professional advice before making any investment decision. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.