The brokerage firm Jefferies has reaffirmed its Buy rating on Bharat Electronics Ltd (BEL), setting a price target of Rs 370 per share. According to the firm, the company’s strong quarterly earnings, order book, and growth prospects is a key highlight in India’s defence electronics sector.
3 reasons why Jefferies has a ‘Buy’ rating on BEL
1. Strong earnings beat expectations
BEL, a Navratna Defense PSU, on January 30 announced its Q3FY25 earnings. The brokerage firm in its report highlighted that the company reported an EBITDA exceeding expectations by 51%. Furthermore, its margins rose by 335 bps YoY to 28.7%, surpassing the anticipated 23.7%.
According to Jefferies, BEL’s revenues tend to be volatile due to delivery schedules, but the company’s ability to maintain its guidance signals confidence in its long-term growth.
“Margin strength gives confidence on profitability sustaining,” said the brokerage firm in its report.
2. Order book remains strong despite decline
As of Q3FY25, BEL reported an order book of Rs 711 billion, a 7% YoY decline. The company secured over Rs 22 billion orders in the quarter, compared to Rs 116.3 billion YoY. As per the brokerage report, BEL retained its Rs 250 billion annual order inflow guidance for FY25, which is expected to be a key stock driver.
According to the brokerage firm, management remains confident in meeting this target, stating that “orders are in final conclusion stages, and relevant ministry clearances are broadly in place.”
3. Revenue growth on track, margins to remain strong
The brokerage firm in its report highlighted that the company reported a 39% YoY revenue growth in Q3FY25, exceeding the 12% expectation. Despite a marginal revenue miss in FY24 due to supply chain disruptions from Russia and Israel, the brokerage house expects BEL’s annual revenue growth for FY25 to remain at 16% YoY, slightly above management’s guidance of 15% YoY.
Furthermore, the firm in its report added, “BEL is attractively priced within Indian industrial majors and has the highest medium-term visibility on growth prospects.”
The brokerage house values BEL at 40x PE FY27E, which is a 208% premium to its 10-year average of 19.2x, citing strong earnings visibility.
While BEL’s outlook remains positive, Jefferies outlined potential downside risks, which included a slowdown in India’s defence indigenisation push and uncertainty around long-term cost control measures.
BEL Q3FY25 performance
BEL’s revenue grew by 37% in Q3FY25, reaching Rs 5,643 crore, compared to Rs 4,120 crore last year. Its operating profit (EBITDA) increased by 57.5% to Rs 1,653 crore. The EBITDA margin also improved to 28.7%, rising by 330 basis points. Meanwhile, BEL’s profit before tax (PBT) rose by 49.64% to Rs 1,754 crore, up from Rs 1,172 crore in the same period last year.
BEL stock performance
BEL is currently trading at Rs 292.20, up by 4.83% as of 2:01 PM IST today, January 31. Over the past five days, its shares have risen by Rs 27.90, or 10.56%. The stock has seen a 52-week high of Rs 340.50 and a low of Rs 171.75, with a market capitalisation of Rs 2.12 lakh crore.