Hold Bharat Electronics; target of Rs 374: Prabhudas Lilladher

Prabhudas Lilladher's research report on Bharat Electronics

Bharat Electronics (BEL) reported a modest 5.2% YoY revenue growth, impacted by a revenue deferment of ~Rs2.0bn to the next quarter due to supply chain constraints. EBITDA margin expanded by 576bps YoY to 28.1%. Domestic demand remains strong, supported by a healthy tendering pipeline and a continued push for higher indigenization. Additionally, BEL stands to benefit from a ~Rs30bn opportunity linked to electronic systems for HAL’s additional 97 LCA Mk1A aircrafts. Recent geopolitical developments and India’s FTA with the EU are expected to unlock new export opportunities, aiding the company’s USD 120mn+ export revenue target. The ~Rs300bn QRSAM order is now expected in Q4FY26, while BEL remains well-positioned to benefit from the government’s emergency procurement initiatives. Non-defence growth avenues include Kavach, Homeland Security, data centres, fibre optics, and an improved service mix (targeting ~15% of revenues vs. ~10% currently), supporting margin expansion.

Outlook

We maintain our ‘Hold’ rating, valuing the stock at a PE of 40x Mar’27E (same as earlier) arriving at a TP of Rs374 (same as earlier).

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