BEL shares decline up to 3% amid rich valuations despite strong Q3; profit booking pulls defence index 2% lower

BEL shares see profit booking in trade. 

• BEL shares fell over 3 percent despite strong Q3 profit and revenue growth.
• Brokerages split on BEL outlook with target prices ranging from Rs 390 to Rs 556.
• Nifty Defence index fell 2% after recent rally and profit booking.

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Bharat Electronics Ltd (BEL) shares fell over 3 percent on Thursday amid profit booking, despite the company reporting strong December quarter results. The stock touched an intraday low of Rs 438.25.

The defence PSU on Wednesday reported a 20.4 percent rise in consolidated net profit for the December quarter, while revenue from operations grew nearly 24 percent year-on-year.

BEL shares have gained 36.3 per cent so far in 2025 and are up about 13 per cent in January.

Brokerage firm CLSA maintained an ‘outperform’ rating on the stock with a target price of Rs 453, noting that third-quarter execution was better than expected. However, it said much of the optimism is already priced in, adding that near-term stock movement will depend on execution of the company’s large order backlog amid lumpy order inflows.

Kotak Institutional Equities reiterated its ‘sell’ rating with a target price of Rs 390, citing limited upside after the recent rally and an unfavourable risk-reward profile at current levels.

JP Morgan, which has an ‘overweight’ rating on BEL with a target price of Rs 556, said the company’s earnings beat estimates but cautioned that margins may normalise. It added that growth will hinge on operating leverage and timely execution of orders.

BEL is a constituent of the benchmark Nifty 50 index. The sharp decline in the stock also weighed on other defence stocks.

The Nifty Defence index, which had risen for two consecutive sessions, snapped its rally and fell up to 2 percent on Thursday amid profit booking.

Defence stocks had rallied over the past two sessions after India and the European Union concluded a defence and security agreement aimed at enhancing cooperation in areas such as counter-terrorism, the Indo-Pacific and joint development of military hardware.

The pact was finalised at the India-EU summit between Prime Minister Narendra Modi and European Commission President Ursula von der Leyen, along with European Council President Antonio Costa. Officials said the agreement is expected to improve interoperability in the defence sector and create opportunities for Indian companies under the EU’s Security Action for Europe programme.

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