Bharat Electronics hits new high on strong outlook; zooms 27% in 15 days

In past 15 trading days, the stock of state-owned defence company has surged 27 per cent and zoomed almost 70 per cent in the last six months.

Shares of Bharat Electronics (BEL) hit a new high of Rs 235.20, gaining 3 per cent on the BSE in Friday's intra-day trade amid heavy volumes in an otherwise weak market on strong business outlook. Analysts expect BEL's revenue may rise 30 per cent year-on-year on execution of a robust orderbook in the March quarter.

In past 15 trading days, the stock of state-owned defence company has surged 27 per cent. In past six months, it zoomed nearly 70 per cent, as compared to a 12 per cent rise in the S&P BSE Sensex.

BEL is  the  dominant  supplier  of  radar,  communication  and  electronic warfare equipment to the Indian armed forces. As on April 1, 2024, the total order book of BEL stands at around Rs 76,000 crore, providing revenue visibility for the next couple of years. In the fiscal year 2023-24, BEL has secured orders worth around Rs 35,000 crore.

BEL is in sync with the Government's 'Make in India' initiative as indigenisation, procurement from Micro, Small & Medium Enterprises (MSMEs) and Government e Marketplace (GeM) continue to top the company's priority list. The management said the company will continue to explore new growth opportunities through export initiatives, diversification, capability enhancement, competitiveness and modernization.

Moreover, BEL's pipeline of fresh orders remains healthy, supported by the Government's growing capital budget allocation and continued focus on rolling out reforms to increase India's defence product manufacturing capability and gradually reduce imports. Additionally, large defence offset requirements of foreign suppliers also provide opportunities for business growth over the medium term, according to analysts.

Analysts at JM Financial Institutional Equities believe revenue growth will sustain going forward driven by robust order backlog, strong order pipeline, diversification in other segments (hydrogen fuel cell, EV batteries etc), focus on nondefence segment and focus on increasing exports revenue.

The brokerage firm said they remain positive on BEL given strong order backlog, sustained steady margin profile, healthy order prospects (expects to bag cumulative orders worth Rs 50,000 crore in FY25 and FY26), continuous focus on diversification and exports markets and continued indigenisation push by GoI.  However, the stock is currently trading above analyst’s target price of Rs 225 per share.