Analysts retain 'Buy' on BEL amid strong orders, margin growth, tech thrust

Nuvama Institutional Equities and Choice Institutional Equities have maintained their 'Buy' ratings on the Bharat after the company reported an 18 per cent rise in net profit to ₹1,286 crore in Q2FY26

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Brokerages remain bullish on Navratna defence and aerospace firm Bharat Electronics (BEL) following the company’s second-quarter results for FY26, which surpassed Street expectations. Nuvama Institutional Equities and Choice Institutional Equities have maintained their ‘Buy’ ratings on the stock after the company reported an 18 per cent rise in net profit to ₹1,286 crore in Q2FY26, up from ₹1,088 crore in the same quarter last year.

 

During the quarter, BEL’s revenue climbed 26 per cent year-on-year (Y-o-Y) to ₹5,764 crore from ₹4,583 crore, while earnings before interest, tax, depreciation, and amortisation (Ebitda) rose 22 per cent Y-o-Y to ₹1,695.6 crore.

 

Despite the strong numbers, Bharat Electronics shares were trading lower on the bourse on Monday at 09:45 AM, at ₹420.50 per share, down 1.3 per cent from Friday’s close of ₹426.15 on the BSE.

Nuvama: Margins and orders driving confidence

Nuvama analysts have retained BEL as their top pick, citing consistent margin outperformance and strong order accretion. “Higher localisation content, a favourable product mix, and cost/operational efficiencies are expected to bolster earnings momentum,” they said.

 

“The positives outweigh the negatives, given BEL’s consistent track record of surpassing both internal guidance and Street profitability expectations,” Nuvama added. The brokerage raised FY26–28 EPS estimates by 4 per cent/4 per cent/3 per cent and rolled over valuation to 45x Mar-28E EPS, yielding a target price of ₹520, up from ₹465 earlier.

 

Nuvama noted that management reaffirmed FY26 guidance of ₹27,000 crore+ revenue (ex-QRSAM), ~15 per cent growth, and ~27 per cent+ operating margins, along with planned capex of ~₹1,000 crore. The company’s backlog stands at ₹75,600 crore, including export orders of ~USD 326 million, LRSAM (₹5,000 crore), electronic fuses (₹4,500 crore), BMP-2 upgrade (₹3,000 crore), and Akash – Army (₹2,700 crore). The top seven orders total ~₹25,000 crore.

 

Key variables over the next 12–18 months include the timely awarding of large-ticket orders from the ₹1.1 trillion pipeline, including the ₹30,000 crore QRSAM order likely by Q4FY26 post DAC approval in July 2025. Sustained execution and margin momentum could serve as key re-rating catalysts, the brokerage said. 

Choice: Multi-year growth and tech edge

Choice analysts also remain positive on BEL, saying the Q2FY26 management commentary reaffirmed their confidence that the company is well-positioned for a multi-year growth upcycle. “Execution strength, margin discipline, and technological expansion underpin our positive stance,” they wrote.

 

The brokerage reiterated its ‘Buy’ rating with a target price of ₹500, valuing the stock at 40x FY27–28E average EPS.

 

Management’s guidance of 15 per cent-plus revenue growth and 27 per cent-plus Ebitda margins for FY26, they said, reflects operational confidence, supported by a robust ₹75,600 crore order book (3.1x FY25 revenue) and strong inflow visibility of ₹27,000–57,000 crore.

 

Choice highlighted BEL’s focus on system integration and complex defence electronics, which is expected to drive sustained value creation. The upcoming Defence System Integration Complex (DSIC) in Andhra Pradesh, with ₹1,400 crore capex, positions the company to capture high-end programmes such as QRSAM, Project Kusha, and NGC.

 

“With over ₹1,600 crore earmarked for R&D, BEL’s thrust on AI, electronic warfare, UAVs, and cybersecurity substantiates its strategy of building futuristic equipment. We believe this transition, backed by strong export traction and domestic sector tailwinds, will sustain double-digit earnings growth and long-term structural compounding potential,” Choice analysts added.