Shares of Bharat Electronics Ltd (BEL) may gain on July 31 as Morgan Stanley has given an ‘overweight’ rating to the stock and increased its target price to Rs 364 per share.
The revision comes after the government-owned aerospace and defence electronics company’s Q1FY25 performance exceeded expectations in revenue, EBITDA, and adjusted PAT growth.
Analysts at Morgan Stanley noted that BEL has maintained its FY25 guidance and anticipates receiving the significant QRSAM (quick-reaction Surface-to-air missile system) order.
Additionally, the strong Q1 results have led to raised margin forecasts. While Morgan Stanley remains bullish on BEL, UBS has downgraded the stock to a ‘Neutral’ rating despite strong performance in the quarter ended June 2024.
BEL management’s guidance of a 15 percent top line and a Rs 25,000 crore order run rate seems fairly achievable, as per UBS. However, the foreign brokerage does not see a major upside to that and intends to seek greater clarity on timelines for larger platforms such as QRSAM and future Akash orders, etc.
Analysts at UBS still believe that HAL presents better new order growth potential than BEL in the next 12-24 months. The brokerage firm remains directionally constructive on BEL earnings and order book growth but they believe the stock’s medium-term growth potential is priced in.
While UBS has downgraded the stock, it raised target price on the counter to Rs 340 from Rs 333 earlier, based on an unchanged target Price-to-earnings (PE) ratio of 40 times on 12-month-forward earnings as of July 2025.
BEL will continue to explore new growth opportunities through export initiatives, diversification, capability enhancement, competitiveness and modernisation, according to JM Financial.
Prahbudas Lilladher also remains positive on BEL’s long-term growth story given its robust order backlog & pipeline driven by government’s push on indigenization in defense; diversification into non-defense verticals; strong balance sheet, cash flow generation, and return ratios.
On July 30, BEL shares ended over a percent lower at Rs 317.80 on the National Stock Exchange (NSE). So far this year, the stock has zoomed 72 percent, outpacing benchmark Nifty 50 which rose 15 percent during this period.
JM Financial and Motilal Oswal have a ‘buy’ call BEL with a target price of Rs 360 each. Prabhudas Lilladher has upgraded the stock to ‘accumulate’ with a target price of Rs 341, while Nuvama has a ‘hold’ rating on the counter with a revised target price of Rs 304.
The article originally appeared on Moneycontrol.
