Hold Bharat Electronics; target of Rs 374: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Bharat Electronics with a target price of Rs 374 in its research report dated May 20, 2025.

Broker Research

May 21, 2025 / 11:39 IST

hold

Prabhudas Lilladher's research report on Bharat Electronics

We revise our FY26/27E EPS estimate by +2.9%/+3.7% factoring in operational efficiencies and increasing indigenous component, however, downgrade our rating from ‘Buy’ to ‘Hold’ given the recent rally in the stock despite strong outlook. Bharat Electronics (BEL) reported robust quarterly performance with revenue growth of 6.9% YoY and EBITDA margins expanding by 385bps YoY to 30.6%. The company has guided for an order intake surpassing Rs270bn in FY26 supported by strong traction from both domestic and export markets, as well as repeat orders from key defence customers. Furthermore, recent geopolitical events along with India’s FTA with EU is anticipated to open up new avenues for growth. However, certain delays in regulatory processes may result in the big order of QRSAM (worth ~Rs300bn) being awarded by Q4FY26/Q1FY27. BEL is poised to benefit from the government's Emergency Procurement drive, with management expecting clarity soon on its participation across 8–10 key defence items, reinforcing near-term growth visibility. Meanwhile, it aims to grow non-defence revenue mix to 10% by FY26 aided by orders in Kavach, homeland security, data centre, fibre optics to strengthens its long-term growth.

Outlook

We roll forward to Mar’27E with a revised TP of Rs374 (Rs340 earlier) valuing the stock at a PE of 40x Mar’27E (40x Sep’26E earlier). Downgrade to ‘Hold’

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