Bharat Electronics Ltd., that shed as much as 10% in value on Budget day, received a bullish share price target from multinational brokerage firm Morgan Stanley, given multi-year revenue visibility and a large order book. Analysts raised their target for BEL stock to Rs 508 from Rs 418 earlier. That implies a potential upside of 20% over the previous close.
“BEL has multi-year revenue visibility given its large order book and its average indigenisation is around 70-73%. Some large programs in pipelines like QRSAM and Kusha are largely indigenous by design. The company is looking to increase its exports and non-defence business over the medium term,” a note said.
“Among our coverage, we view BEL as the best play on India’s defence indigenization story. BEL has strong earnings visibility (healthy order book and sales) compared to its capital goods peers (mostly short cycle), stable return ratios, and reasonable cash flows,” Morgan Stanley said.
The Union Budget unveiled on Sunday raised defence capex by 18% for FY27 To Rs 2.2 lakh crore, ahead of Morgan Stanley’s estimate of 12-15% growth. Out of the total procurement, 75% will be from the domestic market.
“Order visibility is strengthening with increasing defence acquisition approvals, and tailwinds for execution and growth both look promising. Margin improvements have been a surprise (vs our estimates and consensus), and whilst the revenue mix is a large driver of margins, we expect continued focus on cost and rising exports in the medium term to help BEL’s earnings,” it added.
Analysts raised their earnings projection by 1-2% over FY26-28 to factor in strong Q3 print.
Shares of BEL is up 57% on a 12-month basis but briefily trails its 52-week high of Rs 461.65 hit last week. Out of the 32 analysts tracking the company, 27 have a ‘buy’ rating on the stock, one recommends a ‘hold’ and four suggest a ‘sell’, according to Bloomberg data. The average of 12-month analyst price targets which implies a potential upside of 14%.
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