Hold Bharat Electronics; target of Rs 182: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Bharat Electronics with a target price of Rs 182 in its research report dated January 31, 2024.

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February 06, 2024 / 09:50 IST

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Bharat Electronics

We downgrade to ‘Hold’ rating from Accumulate given steep valuations from the recent run up in stock price. Bharat Electronics (BEL) reported a mixed performance with flat revenue growth and EBITDA margin expansion of 471bps YoY to 25.4%. Revenue was partly impacted by supply chain disruptions caused by the Israel conflict, which led to spillover of revenue worth Rs4-5bn to Q4FY24. 9MFY24 order inflows came in strong at ~Rs266bn, comfortably surpassing FY24 inflow guidance of Rs200bn+. Management estimates ~Rs500bn cumulative order inflows over FY25 & FY26, factoring in Rs200bn QRSAM orders from Indian Army and Air Force. Other defence prospects include BMP upgrade, EW systems, Ashwini radar, airborne missile systems, anti-drone systems, ship upgrades/refits, etc. While defence vertical is expected to grow faster, there are opportunities in non-defence areas such as metros, civil aviation, IT infra, smart cities and cyber security. We remain positive on BEL’s long-term growth story given 1) strong order backlog & pipeline, 2) diversification into non-defence verticals like metros, civil aviation, IT infra, etc. 3) focus on export markets, and 4) govt’s push on indigenization in defence.

Outlook

The stock is currently trading at a P/E of 33.2x/28.6x FY25/26E. We roll forward to FY26 and value the stock at a P/E of 28x FY26E (24x Sep-25E earlier) with a revised TP of Rs182 (Rs143 earlier) owing to robust order inflows & healthy execution outlook. Downgrade to ‘Hold’.

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