Target: ₹504
CMP: ₹416.20
Bharat Electronics Ltd (BEL), a Navaratna enterprise, holds a 37% market share in Indian defense electronics. The company’s core competencies include radar and weapons systems, defense communication, and electronic warfare.
In the second quarter of FY26, BEL reported a notable revenue growth of 26% year-on-year, fueled by strong execution across critical programs such as the Long Range Surface to Air Missile (LRSAM), Himshakti, Akash Army, and Light Combat Aircraft (LCA) avionics. Consequently, the net profit increased by 18% year-on-year, surpassing market expectations.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew by 22% year-on-year; however, the gross margin contracted by 230 basis points due to rising material costs and product mix changes. Operating efficiencies helped mitigate some of this impact, limiting the margin erosion to 90 basis points, which stands at 29.4%.
Currently, BEL holds an order backlog of ₹74,453 crore, equivalent to 2.6 times the estimated sales for FY26, providing strong earnings visibility for the next three years.
The company continues to deliver results that exceed expectations in revenue, margins, and execution, reinforcing a positive outlook. The robust order backlog, alongside strong inflow momentum of ₹12,539 crore as of October, and visibility on significant programs such as QRSAM, NGC, LCA avionics, and GBMES, support sustained multi-year growth. Future opportunities in Advanced Medium Combat Aircraft (AMCA) and Unmanned Aerial Vehicle (UAV) platforms, along with an export expansion target of 10% turnover over three years, enhance long-term growth prospects.
BEL is valued at 48 times its FY27 estimated earnings per share and maintains a BUY rating with a target price of ₹504.
Published on November 21, 2025
