Bharat Electronics share: BEL Q4 order inflow at Rs 7,200 cr; Buy this defence stock, says Nomura

Bharat Electronics Ltd (BEL) saw its shares rising over 2 per cent in Thursday's trade, as Nomura India called the defence PSU its best pick in the sector, citing reasonable valuations, a pick up in ordering activities and scope of rising defence spend in Europe.

BEL has received order inflows worth Rs 7,200 crore till now in the March quarter against Rs 9,800 crore in the first three quarters of FY25. The total order inflows for the year stood at Rs 17,000 crore against the yearly guidance of Rs 25,000 crore.

Nomura said BEL is on track to achieve its guided order inflows, as the defence PSU is currently in final stages of multiple negotiations with customers.

Following the development, the stock rose 2.65 per cent to hit a high of Rs 284.10. Nomura suggested 'Buy' and a target price of Rs 363, which suggested a 27 per cent potential upside over the prevailing market price.

It remains bullish on its order outlook over FY25-FY27 driven by the strength in base order inflows (Rs 15,000 crore per year including AMC/spare contracts), mega orders worth Rs 25,000-30,000 crore for quick reaction surface-to-air missile (QRSAM) and orders worth Rs 15,000 crore in FY27 for medium range surface-to-air missile (MRSAM) system and multifunction surveillance and threat alert (MFSTAR) radar system for next-generation corvette (NGC).

This brokerage also sees multiple derivative orders worth Rs 8,000-10,000 crore for radars, electronic warfare, communications and missile systems.

"Hence, we expect order inflows worth Rs 85,000 crore for BEL between FY25-FY27F," it said.

Nomura said te increasing defence spending by Europe could be positive for BEL as it has strong collaborations with major OEMs. Europe is significantly increasing its defense spending due to a combination of emerging security threats, shifting geopolitical dynamics, and a recognition of the need to modernize military capabilities.

"We assume a PAT CAGR of 19 per cent over FY24-27F and reaffirm Buy with an unchanged target price of Rs 363. The stock currently trades at 35 times/30 times FY26F/FY27F EPS (vs three-year average one-year forward PE of 29 times), implying reasonable valuations, in our view. It remains our top pick in the sector," Nomura said.