Bharat Electronics share price hits 52-week high after UBS raises target on the stock
₹215.35 apiece on the BSE. UBS has maintained a ‘Buy’ rating on Bharat Electronics shares, raised the target price to ₹257 per share from ₹205 earlier, and assigned a 35x PE to March FY26E earnings versus 30x earlier, given better earnings and new orders momentum.
The defence PSU Bharat Electronics has seen sharp new order accretion in FY24 to date, with more than ₹30,000 crore new orders already reported as against consensus estimates of ₹27,100 for the full financial year 2023-2024. This implies 50%-plus growth over FY23 with multiple large-ticket orders being awarded.
Also Read: Stocks to buy: Kotak Mahindra Bank, Bata India, among Anand Rathi’s emerging stock picks After 10% and 15% upward revisions to BEL’s FY24 new order inflows estimates, UBS has again lifted estimates by a further 24% to ₹31,000 crore, building in the past two months’ strong orders and faster pipeline closure for the company. It believes sharply higher new orders reflect the fast-tracking of the defence pipeline, which could help Bharat Electronics sustain a consistent order book ramp-up, justifying higher valuations akin to industrial peers “In our view, accretion (excess in orders booked over sales) of ₹100 billion-plus in FY24E paves the way for an upward revision in topline versus consensus estimates of 14%/14% revenue growth for FY25/26," UBS said.
According to BEL’s management, many of the large projects due in FY25 were fast-tracked by the Ministry of Defense (MoD) and were awarded in FY24, suggesting the government’s robust pace of finalization on defence preparedness. The management expects ₹50,000 crore total orders in FY25 and FY26, while the MRSAM project is not yet factored in given it is early stage.
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