BEL share price target: 4 'Buy' calls within week, among top defence stock picks

Bharat Electronics Ltd (BEL) received at least four 'Buy' or 'Add' recommendations in the past week, as the defence stock looked attractive following a 9 per cent drop over the past six months. The latest to join the bandwagon is Kotak Institutional Equities, which upgraded the defence stock to 'Add' from 'Reduce' with a target price of Rs 410 apiece. HSBC analyst Pinakin Parekh suggested a target of Rs 525, MOFSL's Teena Virmani gave a target of Rs 530, while Nomura's Umesh Raut set a target of Rs 500 on the stock.

Kotak said the correction offered a more balanced risk-reward, supported by a strong pipeline of large defense programs including QRSAM, AMCA and Naval programs, along with the emergence of missiles and exports as key medium-term growth drivers.

"While growth execution and margin normalization remain the risks, healthy order prospects and long-term defense spending visibility support our constructive view on the stock," Kotak said.

The domestic brokerage said missiles are emerging as BEL's second-largest growth vertical after electronics, supported by participation across key programs such as QRSAM, Pralay, Nirbhay/LRLACM and Project Kusha, with missile revenues expected to scale to a high-double-digit share of overall revenues over the next 2-3 years.

"The Rs 30,000 crore QRSAM program remains BEL's most important near-term catalyst, and while revenue contribution is unlikely before FY2029 due to the development and trial phase, the order offers significant long-term execution visibility and follow-on opportunities similar to the LRSAM program," Kotak said.

MOFSL expects BEL to report a revenue growth of 16 per cent YoY, led by the healthy execution of the opening order book of Rs 72,000 crore. Key monitorables included updates on large orders, including QRSAM, Uttam radars, next-gen corvettes, P75I submarines, etc., as well as status AMCA prototype.

"We expect margins to fall by 170 bps YoY to 27.7 per cent, due to execution of a changing product mix. The finalisation of orders, execution of the huge backlog, incremental share of exports, and further indigenization of modules and subsystems will remain key focus areas," MOFSL said.

Earlier this week, MOFSL said  Bharat Electronics remained its top pick in the defence sector.

MOFSL expects BEL to report a revenue growth of 16 per cent YoY in Q2, led by the healthy execution of the opening order book of Rs 72,000 crore. Key monitorables included updates on large orders, including QRSAM, Uttam radars, next-gen corvettes, P75I submarines, etc., as well as status AMCA prototype.

"We expect margins to fall by 170 bps YoY to 27.7 per cent, due to execution of a changing product mix. The finalisation of orders, execution of the huge backlog, incremental share of exports, and further indigenization of modules and subsystems will remain key focus areas," MOFSL said.

For the September quarter, Nomura estimate BEL's order inflows at Rs 3,300 crore, falling 38 per cent YoY on the exceptionally high base. It sees BEL's revenue growth at 15 per cent YoY.

BEL has 37 'Buy' calls and just one 'Sell' recommendations. Its 12-month Bloomberg consensus target at Rs 489.25 implies a 26.8 per cent potential upside.