Buy Bharat Electronics; target of Rs 490: Prabhudas Lilladher

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Bharat Electronics (BHE IN) has a strong order book of ~INR687.2bn, providing healthy execution visibility, with key programs including Electronic Fuses, LCA MK1A, LR-SAM, and BMP-2 upgrades.
  • Management maintained its FY27 revenue growth guidance of 15%+, with EBITDA margins of 28% and order inflows of ~INR250bn, excluding QRSAM worth ~INR300bn.
  • The company expects ~INR200bn orders for electronic systems from GSL and GRSE, with staggered awards largely in FY27 and execution over ~4 years.
  • BEL is witnessing increasing traction in drones and counter-drone systems, with larger orders expected over the next 1–2 years.

Thesis Validation Checklist

  • Investors should watch for order intake and execution, particularly for QRSAM and NGC programs, as well as revenue and margin growth in line with management guidance.
  • The company's ability to maintain its order pipeline and execute on large programs will be key to validating the investment thesis.
  • Additionally, investors should monitor the company's progress in newer business verticals like data centres, cyber-security, drones, and quantum communication, which are expected to aid non-defense growth.