Buy Bharat Electronics; target of Rs 341 Prabhudas Lilladher

Prabhudas Lilladher's research report on Bharat Electronics

The company is on track to meet its full-year order intake guidance of Rs250bn, including Rs85bn+ worth of order from programs such as Ashwini Radar, EW suite MI-17, ADFCR-ATULYA and Shakti Phase-4. QRSAM is in advanced stages of finalization and is expected to be awarded in Q1FY26, potentially adding another Rs250bn+ to the order inflow in FY26. Further opportunities are available in Uttam Radars for LCA Mk1A, artillery systems being developed by private players, naval products and Kavach for the Indian Railways. The company has streamlined LRSAM and other big-ticket items, leading to easing up of supply chain disruptions and better execution. Additionally, 85%-88% of the products supplied are indigenized, and further indigenization efforts are expected to drive margin expansion.

Outlook

We upgrade the rating to ‘Buy’ factoring in the recent sharp correction in stock price with an unchanged TP of Rs341. Bharat Electronics (BEL) reported strong quarterly performance with revenue growth of 14.8% YoY and EBITDA margins expanding by 514bps YoY to 30.3%. Opportunities in defense are expected to sustain for the next 5 years.

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