Bharat Electronics Gets Its Highest Target Price From UBS; Now Preferred Over HAL

UBS expects a significant acceleration in BEL's order book for FY25-28, now projected at 17% compared to its previous estimate of 8%. This includes an estimated Rs 2.4 lakh crore from their long-term pipeline converting into orders, with Rs 1.4 lakh crore in new orders specifically for FY25-28.

Secondly, major platforms that BEL has integrated or upgraded, such as the Akash missile system, IACC control system, L70 gun upgrade, Schilka weapons system, and multiple radars, are now combat-proven. This critical validation positions the Navratna PSU company to secure both new and repeat orders in both domestic and export markets, analysts said.

"With a three-year industry order pipeline of over $28 billion and BHE's competitive edge, we believe growth potential over the next three years is not fully priced in," the note said.

BEL itself anticipates Rs 55,000 crore in new orders for FY26 and a minimum revenue growth of 15%, alongside a 27% Ebitda margin, which is an improvement over their FY25 guidance of 23-25%.

Capital expenditure is guided at Rs 1,000 crore and R&D at Rs 1,600, with 90% of revenue expected from the defence sector. This upward revision in revenue growth, with a minimum guidance of 15-17% and 20% long-term, suggests improved visibility.

This enhanced outlook is attributed to increased exports and higher domestic demand, underpinned by their proven competitive advantage following recent combat deployments, the UBS note said.

Shares of BEL closed 0.1% higher at Rs 383.35 on the BSE on Thursday, compared to a 0.8% decline in the benchmark Sensex.

Twenty-four out of the 28 analysts tracking the company have a 'buy' rating on the stock, two recommend a 'hold' and two suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price target of Rs 394 implies a potential upside of 3%.