Bharat Electronics has delivered stronger than expected order inflows in FY26, even as execution remains broadly in line with estimates. Nomura has retained its Neutral stance on the stock with a target price of Rs 454, implying an upside of 11%.
The brokerage house noted that order inflows came in at Rs 3,00,700 crore against its estimate and company guidance of Rs 2,70,000 crore, supported by large defence contracts across avionics, radar systems and missile-related equipment. Revenue for FY26 stood at Rs 2,67,500 crore, up 16%, while profitability trends remain steady. The firm expects earnings growth to continue, though valuation remains a sticking point.
Nomura on Bharat Electronics: Nomura on Bharat Electronics
Nomura Financial Advisory and Securities said Bharat Electronics surprised on the order inflow front, with FY26 inflows reaching Rs 3,01,000 crore, helped by a steady stream of defence contracts across segments including avionics, radar systems and electronic warfare suites.
The report points to a strong closing order book of Rs 7,40,000 crore, which gives visibility on future revenue. Export orders also contributed meaningfully, with overseas inflows and sales seeing a noticeable rise during the year.
“Order inflows remained healthy and exceeded both our estimates and the company’s guidance,” Nomura said in its report.
Nomura on Bharat Electronics: Strong execution supports revenue growth
Execution trends have held up through the year, with Bharat Electronics delivering steady growth across key programmes. Provisional revenue for FY26 came in at Rs 2,67,500 crore, marking a 16% increase and coming slightly ahead of Nomura’s estimates.
The March quarter is expected to show continued momentum. Nomura estimates fourth-quarter revenue at around Rs 1,02,000 crore, reflecting growth of about 12% on a yearly basis, with operating profit also rising.
This steady pace of execution suggests that ongoing projects across defence electronics, radar systems and missile support are moving largely as planned.
Nomura on Bharat Electronics: Order pipeline remains strong with visibility ahead
The brokerage expects order momentum to continue, with a sharp jump likely in the next financial year. It has pencilled in order inflows of Rs 6,00,000 crore for FY27, driven by large programmes and base business.
A significant portion is expected to come from the Quick Reaction Surface-to-Air Missile programme, along with steady ordering from existing defence segments.
“Led by QRSAM, we expect order inflows to nearly double in FY27,” Nomura said.
Alongside this, base orders are expected to rise, while additional contributions could come from naval programmes such as next-generation corvettes.
Nomura on Bharat Electronics: Margins steady despite mix changes
Margins have remained broadly stable, even as the project mix evolves. Nomura expects fourth-quarter operating margins to stay close to recent levels, with only a slight dip compared to last year.
The report indicates that margin movement has been limited despite the scale-up in execution, suggesting cost discipline and stable pricing across contracts.
However, larger and more complex projects could bring some pressure over time, particularly as integration-heavy programmes gain share in the order book.
Nomura on Bharat Electronics: Earnings growth seen, but pace moderates
Nomura expects earnings to grow at a steady pace over the next two years, though not at the same rate seen earlier. The brokerage has projected a profit after tax growth rate of around 13% between FY26 and FY28.
This compares with a stronger growth phase in the previous cycle, indicating a more measured expansion going forward.
The brokerage has largely kept its earnings estimates unchanged following the FY26 update, as the upside from order inflows is balanced by the timing of execution.
Nomura on Bharat Electronics: Valuation keeps rating in check
Despite the healthy business outlook, valuation remains the key factor behind Nomura’s stance. The stock is trading at elevated multiples compared to its historical range.
“We reaffirm Neutral due to rich valuations,” Nomura said.
The brokerage values the stock at 42 times its FY28 estimated earnings, which it says already captures much of the expected growth in the business.
A large part of the recent order inflow is linked to the Light Combat Aircraft programme, where execution is expected to pick up only from FY28 onwards and continue over several years. This delays earnings recognition and limits near-term upgrades.
Nomura on Bharat Electronics: Risks to watch in execution and ordering
Nomura has pointed to a few factors that could influence the stock’s performance going ahead. Delays in contract finalisation remain a key risk, especially given the scale of defence projects.
Pressure on margins from large integration programmes such as missile systems could also weigh on profitability. At the same time, stronger order inflows than expected could provide some support.
The report also notes that supply chain disruptions could impact execution timelines if they persist.
Conclusion
Bharat Electronics continues to benefit from steady demand across defence segments, with strong order inflows and a sizeable backlog providing visibility on future growth. Nomura Financial Advisory and Securities acknowledges these strengths but remains cautious on valuation. With limited upside from current levels, the brokerage has chosen to stay on the sidelines, even as the company maintains its position as a key player in India’s defence manufacturing space.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.