BEL share: Fresh target prices for defence PSU as Q3 results beat St estimates 

Bharat Electronics Ltd (BEL) beat consensus estimates on the profitability front in the December quarter, led by higher execution and operating leverage. Following this, a couple of brokerages called the defence PSU among their top picks in the sector and raised their target prices, citing strong order book visibility and elevated margins.

BEL reported a 20.82 per cent year-on-year (Yo) jump in profit after tax (PAT) at Rs 1,590.06 crore compared with Rs 1,316.06 crore in the corresponding quarter last year. Its revenue from operations climbed 23.73 per cent YoY to Rs 7,121.98 crore for the quarter compared with Rs 5,756.12 crore in the same quarter last year. 

Foreign brokerage Nomura noted that BEL's gross margin contraction was more than offset by improved operating leverage on account of a 240 basis points drop in other expenses as a percentage of sales. Consequently, Ebitda margin stood at 29.7 per cent, up 101 basis points YoY, which was 156 basis points above consensus estimates.

Recurring PAT was up 21 per cent, which was 7 per cent higher than consensus estimates. Order backlog stood at Rs 73,020 crore, implying order inflow of Rs 5,680 crore in Q3.

"In our view, BEL is well-placed to achieve management’s FY26E OI guidance of Rs 27,000 crore as it has already achieved 71 per cent of the same in YTDFY26," Nomura said as it upped its target price to Rs 454 from Rs 427.

Choice Broking said the Q3 management commentary reinforced its confidence that BEL is firmly in a sweet spot – strong execution, accelerating order momentum and improving strategic depth. 

"While the reported numbers were solid and meaningfully ahead of Street expectation, driven by system-level ownership rather than component supply," it said.

This brokerage suggested a target price of Rs 550 on the stock.  
 
"Retain ‘Buy’ on BEL as one of our sector top picks as we envisage a 17 per cent EPS CAGR over FY25–28E backed by strong order book visibility and elevated margins (higher indigenisation, cost efficiencies). We value the stock at 45x FY28E EPS, implying a TP of Rs 525 (from Rs 520)," Nuvama said.