3 companies operating in very different parts of the economy have made it to Macquarie Research‘s ‘Outperform’ list, but the brokerage’s reasons go well beyond target prices. The brokerage’s focus more on business developments.
Bharat Electronics is backed by expectations of stronger order inflows and a sizeable existing order backlog. GMR Airports is tied to the timely delivery of a major expansion at Hyderabad Airport and the returns that can follow once new assets are commissioned. Cummins India, meanwhile, is benefiting from demand across power generation, data centres, aftermarket services and exports.
Here is what Macquarie Research said about the 3 stocks and the reasons behind its ‘Outperform’ ratings.
Macquarie on Bharat Electronics: ‘Outperform’
Macquarie Research has reiterated its ‘Outperform’ rating on Bharat Electronics and maintained a 12-month target price of Rs 550, which implies a recalculated upside of about 35.04%.
The range of products covered by the new orders is important to Macquarie Research’s view because Bharat Electronics operates across several defence and electronics segments. Rather than depending on one single programme, the company continues to receive orders across communication systems, radar, electronic systems and other equipment and services.
For FY27 so far, the company has secured orders worth Rs 6,200 crore, compared with Rs 11,200 crore during the same period last year. Macquarie Research said the difference was mainly due to the timing of order bookings and continues to forecast Rs 55,000 crore of new orders for FY27.
Macquarie Research said, “We attribute the decline mainly to the timing of order bookings.” The brokerage continues to expect fresh orders during the year, while Bharat Electronics had an order backlog of Rs 72,300 crore at the end of the first quarter of FY27.
The brokerage has also listed risks to its view. A rise in receivables could affect growth, while changes to the nomination-based framework through which a significant part of orders are awarded could affect profitability. The company also has exposure to imports for certain contracts, according to Macquarie Research. Even so, the brokerage continues to expect a stronger flow of orders over FY27.
Macquarie on GMR Airports: ‘Outperform’
Macquarie Research has retained its ‘Outperform’ rating on GMR Airports and set a target price of Rs 120, which implies a recalculated upside of about 20.97%.
The brokerage’s latest assessment comes after the Airports Economic Regulatory Authority issued the tariff order for Hyderabad Airport’s fourth control period, covering FY26 to FY31. GMR has received approval for Rs 1,380 crore of expansion capex at Hyderabad, which supports the airport’s planned capacity growth to 8 crore passengers.
For Macquarie Research, though, approval of the capex is only one part of the story. The more important question is when the expansion is delivered. The brokerage said the programme is heavily weighted towards FY30, and the timing of commissioning will determine when the company begins earning returns from the new assets.
The tariff order has also introduced an arrival user development fee of Rs 220 for domestic passengers and Rs 440 for international passengers. At the same time, departure user development fee (UDF) charges have been reduced. According to Macquarie Research, the overall round-trip origin and destination charge remains broadly unchanged, but part of the charge is now collected through the newly introduced arrival UDF.
Macquarie Research said, “Capex delivery determines tariff.” The brokerage explained that returns on the approved capex will accrue only after the assets are commissioned and subsequently added to the regulatory asset base. This makes execution and commissioning timelines more important to its valuation than the tariff schedule alone.
The brokerage said delays could defer both the next tariff reset and the related improvement in yields. It also continues to treat the realisation of the arrival UDF as a downside risk. The user-pay framework introduced under the tariff order means capex recovery is linked to asset deployment rather than occurring ahead of it, according to Macquarie Research.
Macquarie on Cummins India: ‘Outperform’
Macquarie Research has maintained its ‘Outperform’ rating on Cummins India and retained its target price of Rs 6,150, implying a recalculated upside of about 19.39%.
The brokerage’s positive view is built on strong demand across several parts of the company’s business. Power generation remains a major contributor, while data centres have emerged as an increasingly important source of growth. Macquarie Research also sees additional opportunities as more CPCB IV+ engines move beyond their warranty period and enter the aftermarket cycle.
PowerGen remains Cummins India’s largest revenue segment, according to Macquarie Research. Demand is coming from manufacturing, pharmaceuticals, solar cell plants, e-commerce dark stores, premium residential and commercial projects, as well as municipal and infrastructure activity.
Data centres are adding another layer to the demand story. Macquarie Research said demand is coming from both colocation providers and hyperscalers, supported by digitalisation, AI workloads, cloud adoption and data localisation requirements. The brokerage said some data centre operators are also placing orders earlier to ensure they have sufficient backup power capacity.
Macquarie Research said, “Strong demand visibility underpins a positive growth outlook despite cost inflation pressures.” It said PowerGen and data centres remain important growth drivers, while price increases, aftermarket growth and localisation initiatives also support its view.
Conclusion
Macquarie Research’s three ‘Outperform’ calls are built around three separate business developments.
Bharat Electronics has a large order backlog. GMR Airports has an approved expansion programme. Cummins India meanwhile, is benefiting from demand that extends beyond traditional power generation into data centres, aftermarket services and exports.
The brokerage’s assessment is based on a comprehensive understanding of the long-term value.
Disclaimer: The views, analysis, target prices and stock recommendations mentioned in this article are based on reports and assessments by Macquarie Research and are meant solely for informational and educational purposes. They should not be construed as investment advice or a recommendation to buy, sell or hold any security.
Investments in securities are subject to market risks. Readers are advised to conduct their own research and consult a SEBI-registered investment adviser or other qualified financial professional before making any investment decisions. Past performance is not indicative of future returns, and target prices or projected upsides are subject to change based on market conditions, company performance and other factors.
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