Motilal Oswal maintained its ‘Buy’ rating on Bharat Electronics, with a target price of Rs 490, implying an upside of 24% for the BEL share price from current levels. Recently, the company received an order from the Indian Army for the quick reaction surface-to-air missile (QRSAM) project.
Motilal Oswal on Bharat Electronics: Big procurement by Indian Army
Motilal Oswal stated that it expects Bharat Electronics to also benefit from orders for next-generation corvettes, electronics warfare, follow-on orders for electronics for 97 Tejas Mk1A, and export opportunities. This makes the company a key defence sector stock to watch out for, going forward.
The Indian Army will be procuring 5-6 regiments of the indigenously developed ‘Anant Shastra’ surface-to-air missile weapon systems, and Bharat Electronics will be the lead integrator. This order of Rs 30,000 crore enhances the company’s order book to more than Rs 1 lakh crore now.
Motilal Oswal on Bharat Electronics: Cash flow set to remain strong
Motilal Oswal has accounted for a longer gestation period for these orders and expects annualised sales of 18% and net profit of 17% over FY25-FY28. “We expect operating cash flow and free cash flow to remain strong over FY26-FY28, led by control over working capital. Further, the company has a cash surplus of Rs 9,400 crore (as of FY25), providing scope for further capacity expansion,” said the brokerage house.
Apart from that, Bharat Electronics is well-equipped across 8-10 items for an emergency procurement program and has also tied up with players for EoI for the AMCA program.
These orders, coupled with its existing strong order book of more than Rs 1 lakh crore, will now help Bharat Electronics sustain 15-17% revenue growth over the next 5-7 years.
Bharat Electronics stock performance
The share price of Bharat Electronics has risen 0.3% in the last five trading sessions. The stock has given a return of 8% in the past one month and 39% in the previous one year. Bharat Electronics’s stock price has surged 42% in the past one year.