Order inflows, execution to keep growth elevated for Bharat Electronics

Despite weaker operational performance and lower order inflows in Q1, BEL remains confident of meeting FY27 guidance on sales, margins and fresh orders

Notwithstanding strong execution, which led to 25 per cent revenue growth in the first quarter (April-June/Q1) of 2026-27 (FY27), the operational performance of defence major Bharat Electronics (BEL) was subpar. Order inflows also saw a sharp dip during the quarter.

 

The company is, however, confident of achieving its FY27 guidance on order inflows, sales growth, and margins. Most brokerages remain positive on the stock, given expectations of a strong sales trajectory, healthy order inflows, export opportunities, and margin expansion. At the current price, the stock is trading at 37x its 2027-28 estimated earnings.

 

The company delivered a positive surprise on the sales front as faster execution of key defence electronics orders helped it beat estimates with 25 per cent growth. BEL has maintained its sales guidance of 15 per cent year-on-year (Y-o-Y) growth for FY27, driven largely by the execution of major projects such as Akash for the Army (₹12,000 crore), four D-29 electronic warfare system projects, the Arudhra radar, the infantry fighting vehicle (BMP-2) upgrade, and avionic line replaceable units for the LCA Tejas Mk 1A.

 

BEL expects to secure the quick reaction surface-to-air missile (QRSAM) order, valued at around ₹30,000 crore, by the second quarter (July-September/Q2) of FY27. It also has a healthy order pipeline comprising projects such as the Next-Generation Corvette/Project 75 (India), Hammer Alpha, Shakti Phase-IV, Shatrughat, and Samaghat. Order inflows fell 51 per cent Y-o-Y to ₹3,750 crore, taking the order backlog to ₹72,300 crore, down 3 per cent Y-o-Y. 

 

“What gives us comfort is the order inflow outlook,” says Choice Institutional Equities. “Despite a weak start to the year (₹3,750 crore of inflows in Q1), the management has maintained its FY27 guidance of over ₹55,000 crore and, from the commentary, it appears that inflows are back-ended,” says analyst Putta Ravi Kumar of the brokerage. “Large programmes, such as QRSAM, will drive a meaningful share of inflows,” he adds. The brokerage has maintained its positive stance on BEL, underpinned by robust long-term growth visibility, supported by a healthy order book and a strong order pipeline. It has reiterated a ‘buy’ rating with a target price of ₹500.

 

On the export front, BEL has an order book of $465 million and is actively pursuing opportunities worth 4-5x this value, with confidence in converting around $300 million into orders during FY27. The company is also strengthening its focus on next-generation defence technologies, including high-power laser- and microwave-based hard-kill systems. Its 2-kilowatt directed energy weapon has already been commercialised.

 

Nuvama Research believes that the execution ramp-up of air defence programmes, along with growth in repairs, upgrades, and exports, will underpin healthy long-term growth for BEL. The brokerage has retained its ‘buy’ rating with a target price of ₹485.

 

Despite the revenue uptick, gross margin in the quarter fell by 770 basis points (bps) Y-o-Y to 45.5 per cent due to the execution mix. Given the lower gross margin, operating margin also declined by 290 bps to 25.1 per cent. The management remains confident of achieving its margin guidance of over 28 per cent for the year. In Q1FY27, other expenses were lower due to a higher provision for liquidated damages in the base quarter.

 

Antique Research points out that BEL has developed multiple growth levers through robust infrastructure, strong relationships with government entities, diversification into non-defence businesses, the installation of new factories, and an increased focus on research and development. Analyst Sanjeev Zarbade of the brokerage remains positive on the stock, citing the robust order backlog, strong pipeline of opportunities, and proven execution capabilities. The brokerage has maintained a ‘buy’ rating with an unchanged target price of ₹532.