Prefer HAL over BEL shares; Bharat Electronics commentary at 4 pm eyed, says Nomura

Bharat Electronics Ltd (BEL) saw its shares falling 2 per cent in Wednesday's trade following the defence manufacturer's less-than-expected March quarter results. Hindustan Aeronautics Ltd (HAL) shares, down nearly a per cent today, are also showing weakness for the past few sessions after the Tejas maker's Q4 results. Among the two stocks, Nomura India prefers Hindustan Aeronautics, which is also its top defence sector stock pick.  

The foreign brokerage has 'Buy' rating on HAL, with a target of Rs 6,040. Nomura had suggested a HAL target of Rs 5,954 in April 2026, Rs 6,000 in February 2026, Rs 6,100 in May 2025 and Rs 4,700 in February 2025.

In the case of BEL, where Nomura has 'Hold' rating, the broking firm has retained its target of Rs 454 apiece. The target for this stock has been revised upward by almost 100 per cent by Nomura in the past two years -- May 2024 target on BEL stood at Rs 232 per share. 

On BEL's Q4 results, Nomura said BEL delivered steady operating performance in 4QFY26, which was largely in line with consensus estimates and slightly below our estimates. The management’s commentary on FY27E guidance, order inflow momentum, and margin trajectory will be key to monitor at the upcoming earnings call scheduled on Wednesday at 4 PM IST. 

"We maintain our Neutral rating and target of Rs 454. The stock currently trades at 45 times and 39 times FY27 and FY28 EPSes of Rs 9.30 and Rs 10.80," it said. 

Overall, BEL's revenue came in line 1 per cent lower the Bloomberg consensus estimate. Ebitda was 2 per cent above the consensus estimate. Ebitda margin at 29.1 per cent, down 147 bps YoY, which was 77 basis points higher than the consensus estimate of 28.3 per cent. 

"The increase in gross margin was offset by higher other expenses which grew 36 per cent YoY and stood at 10.9 per cent of sales," Nomura India said.