Buy Bharat Electronics; target of Rs 1470:Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Bharat ElectronicsBHE reported revenue of INR15.2b (down 5.7% YoY) v/s estimate of INR17.2b and operating profit of INR2.9b (up 5.2% YoY) v/s estimated profit of INR3.2b. Gross margin expansion of 496bp YoY improved margins 200bp YoY to 19.3%.  3QFY16 revenue at INR15.2b (down 5.7% YoY) was below estimate of INR17.2b, led by execution deferments on account of delay from vendors in supply of input equipment like Tatra truck from BEML. For FY16, BHE expects contribution from segments like radar and missile systems, communication and network centric systems, tank electronics, gun upgrades, electro-optic systems and electronic warfare/avionics system. BHE is well positioned to benefit from the rising defense expenditure, supported by a) strong manufacturing base (capacity utilization of ~60%) and execution track record, b) relationship with defense and government agencies, c) strategic collaboration with foreign technology partners for development of new products, d) in-house R&D capabilities (R&D spend at 7.6% of revenue) and e) increased focus on exports to friendly countries. We maintain Buy with a price target of INR1,470/share—20x FY18E (near its peak historical valuation of 22x), to factor the improved pace of decision making in defense and higher FII limit. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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