Sensex rejig: Bharat Electronics shares at record high; UBS upgrades to Buy

Business Standard

23-05-2025

Bharat Electronics share price today: Bharat Electronics (BEL) shares hit a new high of ₹389.90, up nearly 2 per cent on the BSE in Friday's intraday trade, on inclusion of the company in the BSE Sensex index. BEL stock will be included in the Sensex index from June 23, 2025.
The stock price of the public sector undertaking (PSU) defence company has rallied 55 per cent from its previous month low of ₹252.25, touched on April 7, 2025. Further, in the past one month, it has outperformed the market by surging 26 per cent as compared to a 1.3 per cent rise in the BSE Sensex index.
BEL, Trent included in BSE Sensex in index rejig
Tata Group-owned Trent, along with Bharat Electronics will become a part of the BSE Sensex index soon. These stocks will replace IndusInd Bank and Nestle India, as a part of the latest rebalancing announced by Asia Index Pvt Ltd, a BSE Ltd subsidiary. Changes in the Sensex index will take effect from the start of trading on June 23, 2025.
The index reshuffle is expected to trigger capital movements as funds tracking the Sensex adjust their portfolios accordingly.
BEL is likely to see inflows worth about $275 million, or 3.1 times its average daily volume (ADV). Notably, BEL, a key defence stock, has climbed nearly 33 per cent in the last six months.
UBS sees significant growth opportunities in BEL; upgrades to Buy
UBS has upgraded BEL stock to 'Buy' as it expects a significant order book acceleration in FY25-28E (17 per cent vs 8 per cent previously) with ₹2.4 trillion of the long-term pipeline expected to be converted into orders (FY25-28E new orders of ₹1.4 trillion). This would be on the back of the major platforms that have been integrated/upgraded by BHE (Akash missile system, the IACC control system, L70 gun upgrade, Schilka weapons system, multiple radars), which are, now, combat-proven. This, UBS said, could help BEL book orders/repeat orders in domestic/export markets.
Analysts at UBS value BEL stock on 45x 12M forward PE with a price target of ₹450 (vs ₹320 earlier) as the brokerage firm believes the long-term pipeline with a faster translation to revenue is underappreciated by the market.
ICICI Securities on BEL
ICICI Securities said BEL's order backlog stands at ₹71,650 crore as of March 2025 (3x trailing twelve month or TTM revenues), which provides healthy revenue growth visibility over the next 2-3 years considering the steady execution.
Moreover, orders pipeline remains robust for BEL in defence electronic systems (including electronic warfare, radars, communication & control systems, navigation systems, avionics etc. for various platforms), non-defence and exports
Management has provided a guidance of ~₹27,000 crore of order inflow in FY26E (~₹2,655 crore worth of orders received in YTDFY26). Orders inflow during FY27E is likely to be even much higher than annual run-rate, with the expectation of large-scale order of Quick Reaction Surface-to-Air Missile (QRSAM) (₹30,000 crore), getting placed with the company.
Analysts at the brokerage firm believe that the defence electronics market in India is experiencing significant growth, driven by efforts to boost domestic production and reduce dependence on imports. Operational performance during the quarter remains healthy on a Y-o-Y basis, led by well-planned execution. Management's guidance of ~15 per cent Y-o-Y revenue growth with ~27 per cent earnings before interest, taxes, depreciation and amortisation (Ebitda) margin has been maintained, showing well-planned execution.
With healthy order-backlog, robust pipeline and improving execution led by increasing indigenisation, the brokerage firm believes that BEL provides strong earnings visibility. It expects revenue & PAT compounded annual growth rate (CAGR) at ~17 per cent & ~18 per cent respectively over FY25-27E.
About Bharat Electronics
Bharat Electronics (BEL), is a leading aerospace and defence electronics company. It primarily manufactures advanced electronics products. The company has a diverse product range including radar, missile systems, electronic warfare & avionics, anti-submarine warfare, electro-optics, homeland security, civilian products, etc