Anant Shastra: BEL share price target as defence order book tops Rs 1 lakh crore mark

MOFSL on Monday retained its 'Buy' rating on defence stock Bharat Electronics Ltd (BEL), suggesting a 24 per cent potential upside. The Indian Army has issued a tender to Bharat Electronics for the QRSAM project, also known as Anant Shastra, worth Rs 30,000 crore, which would include procuring of 5-6 regiments of the indigenously developed ‘Anant Shastra’ surface-to-air missile weapon systems. BEL will be the lead integrator. 

MOFSL said the order enhanced BEL's order book to more than Rs 1 lakh crore. 

"Along with this order, we expect BEL to benefit from orders for next-generation corvettes, electronics warfare, follow-on orders for electronics for 97 Tejas Mk1A, loitering munition programs, and export opportunities. We maintain our estimates and reiterate BUY on BEL with a share price target of Rs 490, based on 45x Sep’27E earnings," MOFSL said.

MOFSL said its estimates already factor in large-sized order inflows from QRSAM and next-generation corvettes to materialise between FY26 and FY27. It is also baking in longer gestation period for these orders and expects a sales growth of 18 per cent, Ebitda growth of 17 per cent and profit growth of 17 per cent over FY25-28. 

"We expect OCF/FCF to remain strong over FY26-28, led by control over working capital. Further, the company has a cash surplus of Rs 9,400 crore (as of FY25), providing scope for further capacity expansion," MOFSL said.

From the recently announced technology and capability road map, TPCR 2025, MOFSL expects BEL can target wide-ranging opportunities across all three services, with the Army focusing on EW systems, radios, radar modules, and drone-countering solutions; the Navy seeking advanced radars, sonar suites, ESM systems, integrated masts, maritime communication networks, and tactical 4G/5G systems; and the Air Force requiring secure communication networks, surveillance radars, EW suites, IFF systems, and AI/ML-based data fusion.

Under TPCR 2025, annual potential ordering for the sector can be $25-30 billion over the next couple of years, it said.

In the case of Anant Shastra, the mobile system can search, track and engage targets on the move, with a firing range of around 30 km, complementing existing MRSAM and Akash systems. BEL will be the lead integrator for the project. MOFSL expects the award of missiles for QRSAM to flow through to Bharat Dynamics (BDL). MOFSL expects the execution to commence primarily from FY27 onward.

"Beyond this QRSAM project, over the next 12-18 months, we expect the company to benefit from the finalization of orders for next-generation corvettes, multiple subsystem orders for the MF-STAR radar program, which are currently under configuration and pricing discussions with shipyards, Shatrughat and Samaghat electronic warfare (EW) systems, follow-on order for 97 LCA Mk1A, aircraft and loitering munition programs such as MALE-class
drones," MOFSL said.

BEL, MOFSL said, is also well positioned across 8-10 items for an emergency procurement program and has also tied up with players for EoI for AMCA program. 

"These orders, coupled with its existing strong order book of more than Rs 1 lakh crore, now will help BEL sustain 15-17 per cent revenue growth over the next 5-7 years, MOFSL said.