Defence PSU stock: Bharat Electronics shares up 2% on Rs 1,155 crore orders

Defence PSU Bharat Electronics Ltd (BEL) saw its shares rising 2 per cent in Wednesday's trade after the Navratna firm secured orders worth Rs 1,155 crore. In a filing to stock exchanges, BEL said it won Rs 850 crore order from Cochin Shipyard Ltd for the supply of indigenous Multi Function Radar in X Band.

"This fully indigenous radar designed by DRDO and manufactured by BEL is capable of detecting, acquiring and tracking airborne targets to provide protection to naval ships," Bharat Electronics said.

Besides, BEL said it has secured orders valued at Rs 305 crore, following its last disclosure to stock exchanges on August 22, which include navigational complex system for ships, thermal imagers, communication equipment, fire control system, gun control system, spares, services, etc.

"With these orders, BEL has now accumulated orders totaling Rs 7,075 crore in the current financial year.

Following the development, the stock climbed 1.6 per cent to hit a high of Rs 290.40 on BSE. "The stock is currently trading at a PE of 45.4 times/37.6 times on the earnings of FY25/26E. We have a 'Accumulate' rating with a target price of Rs 341," Amit Anwani, Research Analyst at Prabhudas Lilladher.

Recently Defence Acquisition Council (DAC) approved capital acquisition proposals worth Rs 1.45 lakh crore. They included procurement of air defence fire control radars, which is seen positive for BEL.

Nomura India believes Bharat Electronics stands to benefit from Air Defence Fire Control Radars (ADFCR/Atulya) and follow-up orders such as Lynx-U2 Fire Control Systems and sensors (about 25 per cent of the vessel value) from proposed shipbuilding projects.

In a note on September 6, Ashika Stock Broking said India's defence industry is set to grow rapidly, driven by global political tensions, ambitious defence goals and indigenisation efforts. Defence production is likely to clock 21 per cent CAGR over FY23-FY29, it said.

Out of Rs 6.2 lakh crore defence budget, Rs 1.7 lakh crore or 27.7 per cent is earmarked for capital acquisition within which Rs 1 lakh crore is meant for domestic procurement and enhancing self-reliance.

"Defence capital outlay is expected to clock 8 per cent CAGR over FY25-FY29, with capex likely to reach 31 per cent of total budget by FY29," it said.