Bharat Electronics Q2FY26 preview: Strong revenue growth, margins may ease on product mix

Brokerages will be watching for updates on major order announcements. The pace of execution on large-scale defence and electronic warfare projects, as well as the company’s commentary on delivery timelines, will also be critical.

Bharat Electronics Ltd (BEL) is expected to report healthy double-digit revenue growth for Q2FY26, driven by steady execution of its robust order book, though margins may soften due to product mix and high base effects. Brokerages estimate revenue at around Rs 5,335 crore, up 16.4% year-on-year, while net profit is likely to rise modestly by 3.9% to Rs 1,134 crore.

Bharat Electronics is expected to announce its Q2FY26 results on October 31. The average of six brokerage estimates pegs revenue at Rs 5,335 crore, up 16.4% year-on-year from Rs 4,583 crore in Q2FY25, driven by steady execution of the company’s robust order book. However, net profit is expected to grow modestly by 3.9% year-on-year to around Rs 1,134 crore, compared with Rs 1,091 crore in the same quarter last year, as margins are likely to come under pressure. The average EBITDA margin is estimated at 27.4%, a contraction of about 290 basis points from 30.3% in Q2FY25.

Among brokerages, Kotak Institutional Equities is the most optimistic with revenue at Rs 5,458 crore and profit at Rs 1,195 crore, while MOSL are at the lower end of the range with net profit of Rs 1,100 crore, respectively.

What will drive earnings

Strong order flow

Most brokerages expect robust order inflow momentum for Bharat Electronics (BEL), even as quarterly performance may be affected by product mix and margin normalization. Nomura projects order inflows of Rs 53,000 crore, up 114 percent year-on-year on a low base, while Kotak Institutional Equities pegs inflows at Rs 52,000 crore, implying around 100 percent growth. BEL has already achieved close to half of its FY26 order inflow guidance, underscoring continued demand from key defence programs. Analysts are closely tracking developments related to the Quick Reaction Surface-to-Air Missile (QRSAM) contract, along with progress on long-range surface-to-air missile (LRSAM) and electronic warfare (EW) systems, as well as the large 97-aircraft LCA Mk1A order. Motilal Oswal adds that upcoming projects such as the Advanced Medium Combat Aircraft (AMCA) and emergency procurement opportunities could further strengthen BEL’s order pipeline in the coming quarters.

Healthy revenue growth

Revenue growth is expected to remain strong across brokerages, supported by healthy execution of BEL’s large order book, estimated at over Rs 74,000 crore. Nomura forecasts a 15.6 percent year-on-year rise in second-quarter revenue, while Kotak expects an 18.5 percent increase to Rs 5460 crore. Motilal Oswal and Elara also project a 14–15 percent year-on-year growth, driven by strong delivery momentum and steady execution across major defence programs. The broad consensus is that BEL’s scale of execution, particularly in radars, communication systems, and electronic warfare segments, will continue to underpin its top-line growth through FY26.

Margins likely to moderate

Margins are expected to soften modestly year-on-year due to an unfavourable product mix and a high base, though a slight sequential improvement is likely. Kotak projects an EBITDA margin of 28.1 percent, down 230 basis points year-on-year but up 20 basis points quarter-on-quarter, while Motilal Oswal expects a margin of 27.4 percent, contracting by 290 basis points. Nomura anticipates largely flat EBITDA on a year-on-year basis, citing lower gross margins. Despite the moderation, analysts believe BEL’s operating efficiency, continued focus on indigenisation, and research-led cost control initiatives should help sustain profitability within the company’s long-term target range.

Execution focus and diversification

Beyond its core defence programs, BEL’s increasing diversification into exports and non-defence segments remains a supportive structural trend. Motilal Oswal highlights the need to monitor execution progress on key radar and EW projects, while Nomura and Kotak emphasize the importance of maintaining discipline in working capital and delivery schedules to support cash flow. BEL’s ongoing shift toward higher-value integrated systems, along with its focus on self-reliance and localisation of critical components, is expected to enhance its competitive position. The company’s growing export potential, particularly in integrated command systems and radar platforms, is also seen as a key contributor to long-term growth stability.

What analysts will be watching for

Brokerages will be watching for updates on major order announcements. The pace of execution on large-scale defence and electronic warfare projects, as well as the company’s commentary on delivery timelines, will also be critical.  Analysts will look for signals on BEL’s progress in indigenisation and export expansion, both of which remain central to its long-term strategy.