BEL stock up 2% today; Jefferies shares near-term trigger for defence PSU

Bharat Electronics Ltd (BEL) jumped over 2 per cent in Monday's trade after foreign brokerage Jefferies upped its target price on the defence stock to Rs 325. The PSU needs another Rs 11,300 crore order inflow to meet its FY25 guidance and that global news on rising defence spend may be a near-term trigger for BEL, NDTV Profit reported Jefferies as saying.

It noted that BEL had announced 83 per cent of its FY23 order flow in the month of March, meeting its annual guidance that year. It further suggested that the government's defence spends rose 87 per cent YoY in Jan 2025.

BEL shares rose 2.32 per cent to hit a high of Rs 283.45. The stock later cut gains and was trading at Rs 278.20, up 0.43 per cent. The scrip is down 5.03 per cent year-to-date.

Last week, JMorgan retained its 'overweight' rating on the BEL stock and suggested a target price of Rs 343. This brokearge sees BEL as a structural growth opportunity with strong order announcements. A 20 per cent correction from peak levels presents a good entry opportunity, it felt.

Also last week, Antique Stock Broking called Bharat Electronics Ltd (BEL) as among most consistent performers in the defence sector and assigned a 'Buy' rating on the scrip, with a target price of Rs 376 apiece.

Also last week, Antique Stock Broking found BEL's track record solid, given 12 per cent revenue, 19 per cent Ebitda and 16 per cent profit after tax, compounded annually, over FY14-24. It cited that BEL order inflow for FY14-24 grew at 24 per cent annually, leading to an record order backlog of Rs 76,000 crore at the end of FY24.

"Recent stock price correction along with the broader sector and market correction offers a good entry point to own a quality defence stock with market leadership position in the defence electronics segment," Antique said.

BEL has guided for Rs 25,000 crore order inflow in FY25. The PSU defence player is anticipating the order inflow to significantly improve in FY26 on the back of large ticket orders such as QRSAM (Rs 25,000-30,000 crore). The next generation corvette/ MRSAM (Rs 15,000 crore) is believed to be finalised in FY26, along with regular base orders worth Rs 15,000 crore.

"Calculated order backlog stands at Rs 74,400 crore, providing revenue visibility of 3.2 times its TTM revenue. BEL expects the large-ticket QRSAM order to materialise by the end of FY26. The ordering pipeline from a medium-term perspective is healthy with large-ticket orders like a) Long range radars, b) BMP upgrade order, c) Electronic warfare system, which will ensure more than Rs 40,000 crore of annualised order inflow for FY26/ 27," Antique said.