Global brokerage firm Macquarie has reaffirmed its 'Outperform' rating on shares of Bharat Electronics Ltd (BEL), a leading defense public sector undertaking (PSU). The firm has set a 12-month target price of ₹550 for BEL, indicating a significant potential upside of 44.01% from its current market price of ₹381.90.
Strong Order Inflows Bolster BEL's Position
BEL has continued to strengthen its order book, securing new contracts worth ₹530 crore since its last disclosure on September 17. These orders encompass a diverse range of defense and technology solutions, including communication equipment, avionics, cybersecurity solutions, drones, jammers, software solutions, upgrades, spares, and services.
With these recent additions, BEL's total order inflow for the fiscal year 2027 (FY27) has reached ₹7,400 crore. This robust inflow complements the company's substantial order backlog, which currently stands at an impressive ₹72,300 crore. Macquarie's optimistic outlook is further supported by its FY27 order inflow forecast of ₹55,000 crore for BEL.
Q2 FY27 Preview: Revenue Growth Expected
Looking ahead to the second quarter of FY27, JM Financial anticipates BEL to report a 10% year-on-year (YoY) revenue growth. This projection aligns with the company's typical quarterly seasonality patterns. The brokerage also expects gross margins to remain stable sequentially, with operating leverage likely contributing to an improvement in EBITDA margins quarter-on-quarter (QoQ).
JM Financial estimates BEL's Q2 FY27 order inflows at ₹3,100 crore. Combined with the ₹3,750 crore of order inflows reported in Q1 FY27, this would account for 27% of the management's full-year order inflow guidance of ₹25,000 crore, excluding the Quick Reaction Surface to Air Missile (QRSAM) program.
Key Monitor: QRSAM Program Updates
Investors and analysts will be closely monitoring any updates regarding the timeline for potential orders related to the Quick Reaction Surface to Air Missile (QRSAM) program. According to JM Financial, developments in this area will be a key factor to watch during the quarter.