Bharat Electronics Ltd. (BEL) continues to be one of the Street's preferred defence plays despite reporting a weaker-than-expected operating margin in the June quarter, with leading brokerages reiterating bullish views on the company's long-term growth prospects driven by a robust order pipeline and rising defence spending.
Bharat Electronics Q1 Results - Standalone
- Revenue at Rs 5,533.06 crore vs estimate of Rs 5,086 crore
- EBITDA at Rs 1,389.2 crore vs estimate of Rs 1,417 crore
- EBITDA margin at 25.1% vs estimate of 27.86%
- Net profit (PAT) at Rs 1,048.33 crore vs estimate of Rs 1,077 crore
JPMorgan retained its 'Overweight' rating with a target price of Rs 525, describing BEL as its top pick in India's defence sector. The brokerage said the quarter's margin pressure was largely attributable to product mix and maintained that the company's FY27 guidance remains intact. Goldman Sachs reiterated its 'Buy' rating while trimming its target price marginally to Rs 470 from Rs 475.
Macquarie remained among the most bullish, raising its target price to Rs 550 from Rs 510 while maintaining an 'Outperform' rating. Jefferies also retained its 'Buy' recommendation despite lowering its target price to Rs 550 from Rs 585.
BEL ended the quarter with an order book of Rs 72,258 crore, while management indicated that large opportunities such as the Rs 30,000-crore QRSAM programme and the Rs 14,000-crore P-75(I) submarine project remain key catalysts.
Brokerages on BEL
JPMorgan
- Maintain Overweight; Target Price: Rs 525.
- Product mix impacted margins in Q1.
- FY27 guidance was maintained across key parameters.
- BEL remains JPMorgan's top pick in the Indian defence sector.
- Medium-term margin sustainability and the impact of the Pay Commission remain key monitorables.
- A strong order pipeline includes NGC, P75I, Hammer, Shakti and electronic warfare (EW) systems.
Goldman Sachs
- Maintain Buy; Cut target price to Rs 470 from Rs 475.
- Order inflows remain the key monitorable.
- Management maintained guidance across key parameters.
- A robust programme pipeline is the key near-term catalyst.
- Margins are expected to remain resilient.
- Exports are becoming an increasingly important part of BEL's medium-term strategy.
- Sees strong growth potential in the counter-drone and drone segments.
Macquarie
- Maintain Outperform; Hike target price to Rs 550 from Rs 510.
- Q1 performance was ahead of expectations.
- Order backlog remained steady.
- Expects FY27 order inflows to exceed Rs 55,000 crore.
- Believes BEL is among the best-positioned stocks to benefit from India's multi-year defence opportunity.
Jefferies
- Maintain Buy; Cut target price to Rs 550 from Rs 585.
- Strong execution offset the margin miss.
- FY27 order inflow guidance was maintained, with 16% of the target already achieved YTD (excluding QRSAM).
- Management reiterated confidence in 15%+ FY27 revenue growth.
- Sees visible double-digit earnings growth over the medium term.
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