BEL shares jump 5% in fag-end trade; brokerage highlights strong growth visibility

Shares of Bharat Electronics Ltd (BEL) rose sharply in Wednesday's late trading session, gaining 4.53 per cent to touch an intraday high of Rs 389. The stock eventually closed 4.26 per cent higher at Rs 388. With this move, the defence public sector undertaking (PSU) has advanced 42.52 per cent over the past six months.

Brokerage Choice Institutional Equities reiterated BEL as one of its high-conviction defence PSU picks, citing a strong order book, revenue visibility over the medium term and structural tailwinds for the sector. It has maintained a 'BUY' rating on the counter with a target price of Rs 500, valuing the stock at 40 times the FY27/28 average earnings per share (EPS).

BEL's current order book stands at Rs 74,859 crore, about 3.1 times its FY25 revenue. The company has guided for order inflows of over Rs 27,000 crore in FY26, excluding the Quick Reaction Surface-to-Air Missile (QRSAM) project. If the QRSAM order is awarded by Q4 FY26, it could add another Rs 30,000 crore, further enhancing order visibility.

On the broader defence sector, Choice noted that Q1 FY26 earnings were mixed. Defence PSUs reported moderate year-on-year (YoY) growth but sharp sequential declines, while private players registered stronger growth from a smaller base. Overall, the sector delivered 9.9 per cent YoY revenue growth to Rs 10,571.9 crore, with EBITDA up 32.2 per cent YoY and margin expansion of 423 basis points to 25.2 per cent.

Choice also highlighted that India's defence production is on a strong growth trajectory. Output rose from Rs 94,845 crore in FY22 and is projected to reach around Rs 3 lakh crore by FY29, implying an 18 per cent CAGR. Exports are also expected to cross Rs 50,000 crore by FY29, supported by government policies, international partnerships and rising demand for indigenous platforms.