Buy Bharat Electronics; target of Rs 540: Motilal Oswal

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Strong Order Book: BHE's order book stood at INR687b as of 2QFY27-end, with a diverse mix of projects, including electronic fuzes, LCA Mk1, and LRSAM.
  • Revenue Growth: The company is expected to deliver revenue growth of 15% over FY26-29, driven by its robust order book and increasing demand from the defense sector.
  • Margin Expansion: BHE's EBITDA margin is expected to remain strong, driven by its ability to maintain pricing power and control costs.
  • New Opportunities: The company is exploring new opportunities in areas such as missiles, drones, and cyber security, which are expected to drive long-term growth.

Thesis Validation Checklist

  • Order Inflows: Monitor order inflows, particularly from the defense sector, to gauge the company's ability to maintain its revenue growth trajectory.
  • Margin Performance: Track EBITDA margin performance to ensure that the company is able to maintain its pricing power and control costs.
  • New Business Development: Monitor the company's progress in new areas such as missiles, drones, and cyber security to assess its potential for long-term growth.