Bharat Electronics: A leading defence PSU, witnessed a sharp rally in its stock price on January 31, soaring 5 percent to close at ₹292.65 on the NSE, just shy of its intraday high of ₹294.2. This surge comes a day ahead of the Union Budget 2025, with BEL breaking past its 50-day, 100-day, and 200-day volume-weighted average prices (VWAP)—a strong technical indicator of bullish momentum.
The rally was backed by heavy trading volume, with over 5 crore shares exchanging hands across the NSE and BSE—nearly 2.5 times its 20-day average volume. This momentum has helped BEL register an 8.3 percent gain this week, adding to its impressive 60 percent rise over the past year.
What’s Driving the Bharat Electronics Stock Rally?
The recent surge in BEL’s share price can be attributed to multiple bullish triggers, including:
Strong Q3 FY25 Earnings: BEL posted a 37 percent YoY revenue growth to ₹5,643.25 crore, with net profit jumping 47 percent to ₹1,316.06 crore. Margin Expansion Surprise: BEL’s EBITDA margin expanded by 330 basis points (bps) YoY to 28.7 percent, significantly beating its own guidance of 23-25 percent and the market expectation of 23.7 percent. Bullish Brokerage Ratings: Multiple brokerage firms, including Jefferies, Nomura, and Nuvama Institutional Equities, have revised their targets upwards, citing BEL’s strong order pipeline and margin sustainability.
Brokerages Maintain ‘Buy’ Ratings; Target Prices Raised
BEL’s stellar Q3 performance has led top brokerage firms to increase their target prices, signaling further upside potential.
Jefferies: Reiterated its ‘Buy’ rating with a target price of ₹370, citing confidence in BEL’s long-term profitability and margin sustainability. Nomura: Raised its FY25 EBITDA margin estimate by 200 bps and earnings-per-share (EPS) estimate by 8 percent, increasing its target price to ₹363. Nuvama Institutional Equities: Increased its FY25-27 EPS estimates by 2-11 percent, setting a revised target price of ₹350, maintaining a ‘Buy’ call.
BEL’s Robust Order Pipeline: A Key Growth Catalyst
BEL’s order book strength and strong order inflow guidance have further fueled investor optimism.
Current Order Book: ₹71,100 crore (equivalent to 3.5 times its FY24 sales) Expected FY25 Order Inflows: ₹25,000 crore Total Order Pipeline: Exceeding ₹1 lakh crore
Nomura expects BEL to secure massive orders between FY25 and FY27, including:
₹25,000-30,000 crore for the Quick Reaction Surface-to-Air Missile (QRSAM) system in FY26. ₹15,000 crore for the Medium Range Surface-to-Air Missile (MRSAM) and MFSTAR radar for next-gen corvettes in FY27. ₹8,000-10,000 crore for radars, electronic warfare, communication, and missile systems from FY25-FY27.
With government focus on Atmanirbhar Bharat (self-reliant India) in defence manufacturing, BEL is well-positioned to benefit from increased domestic orders and policy support.
Financial Ratios: BEL’s Strong Fundamentals
BEL’s solid financial performance is also reflected in its key financial ratios:
Price-to-Earnings (P/E) Ratio: 32.1 Return on Equity (ROE): 22.5% Debt-to-Equity Ratio: 0.01 (Virtually Debt-Free) Earnings Per Share (EPS): ₹4.09 (TTM) Operating Profit Margin: 28.7% (Q3 FY25)
These ratios highlight BEL’s strong profitability, minimal debt burden, and robust operational efficiency, making it a compelling investment bet in the PSU defence space.
Can BEL’s Rally Sustain Post-Budget 2025?
BEL’s recent breakout above key moving averages suggests strong bullish momentum, but can the stock sustain this rally post-Budget?
Key Triggers to Watch: Union Budget Announcements: Any defence spending allocations or policy support for the sector. Order Wins: Execution of ₹85,000 crore worth of potential orders over the next 2-3 years. Margin Performance: Sustaining its EBITDA margin above 25% in the coming quarters.
Analysts believe BEL has multiple growth triggers that could drive further stock re-rating. With a robust order book, consistent earnings growth, and government tailwinds, BEL remains a top PSU defence stock to watch in 2025.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.