Defence stock: BEL shares in correction mode; analysts still see up to 29% upside

Shares of Bharat Electronics Ltd (BEL) on Thursday fell for the seventh straight session, entering the correction mode. But if stock analysts were to go by, the defence share has potential to hit as high as Rs 500 levels over the next 12 months, hinting at up to 29 per cent potential upside. 

On Thursday, the BEL stock was trading 0.6 per cent lower at Rs 386.15. This is 11.4 per cent lower than BEL's 52-week high of Rs 386.35 apiece on July 1. Choice Broking maintained its positive stance on BEL, underpinned by robust long-term growth visibility, supported by a healthy orderbook and strong order pipeline. The government's continued thrust on defence indigenization remains a key structural tailwind, Choice Broking said.

"We revise our estimates based on the average FY27/28 EPS and maintain our target at Rs 500, valuing the stock at 40x forward earnings. We reiterate our ‘BUy’ rating, reflecting confidence in BEL's consistent execution and sustained growth potential," it said.

Nuvama retained its ‘Buy’ on BEL and called it one of the defence sector's top picks, one notch above Hindustan Aeronautics Ltd (HAL), as it envisaged 16 per  cent EPS CAGR over FY25–28E backed by strong visibility and elevated margins.

Nuvama called BEL as the chief beneficiary of India’s defence electronics market and suggested a revised target of Rs 465 against Rs 430.

JM Financial said BEL's order inflows for FY26 are likely to be around Rs 27,000 crore, excluding QRSAM order, worth Rs 30,000 crore that is expected to be booked by Q4FY26 itself. 

"BEL continues to explore new growth opportunities through diversification, capability enhancement, competitiveness, modernization and export initiatives," it said while suggesting a target of Rs 425 on the stock. 

MOFSL said BEL's Q1 profit exceeded its estimate, driven by better-than-expected margins. Revenue growth was aided by a strong order book, though it was affected to some extent by geopolitical issues. 

BEL has maintained its guidance on revenue and order inflows and expects margins to remain strong at 27 per cent. 

"We expect the company to benefit from emergency procurement and the finalization of larger platform orders from the Army, Navy and Air Force. We also expect BHE to benefit from incremental opportunities in exports as defense spending increases globally. We marginally tweak our estimates and maintain BUY with a target of Rs 490 based on 45x Sep’27E EPS," it said.