Neutral Bharat Electronics; target of Rs 190: Motilal Oswal

Motilal Oswal's research report on Bharat Electronics

BEL’s 3QFY24 EBITDA margin and PAT came in ahead of our estimates despite weak revenue growth. Near-term challenges in the supply chain affected BEL’s revenue growth. Order inflows surpassed the company’s guidance due to the up-fronting of orders during the quarter. We expect BEL to be a key beneficiary of the increasing defense indigenization. However, we believe the current stock price already bakes in 15%/16% CAGRs over FY23-26 in order inflows/revenue, including large orders such as QRSAM, hence lacks re-rating potential in the near term. The finalization of large orders will be positive for the company; however, they will also have an elongated execution period.

Outlook

We, thus, maintain our Neutral rating on BEL with a revised TP of INR190 based on 29xMar’26E EPS and would look for better entry points in the stock.