Shares of state-owned defence giant Bharat Electronics Ltd (BEL) declined by 2% on Friday, trading at Rs 363.55 on the BSE, as the market anticipated its September quarter (Q2) earnings report. The stock's movement comes amidst analyst projections for significant financial growth for the period.
BEL Q2 Results: Key Expectations
According to consensus data compiled by Bloomberg, BEL is expected to report a standalone net profit of Rs 1,346 crore for the September quarter, marking a 4.63% year-on-year (YoY) increase. Standalone net sales are projected to reach Rs 6,528 crore, a substantial 13.27% YoY jump. Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) are estimated at Rs 1,792 crore.
Despite the pre-results dip, analysts hold an optimistic outlook for BEL's long-term performance. The average target price from 22 analysts stands at Rs 482.32, implying a potential 32.4% upside over the next 12 months. Recent individual targets include Macquarie's Rs 550, Aditya Birla's Rs 470, and Antique's Rs 532.
Analyst Insights and Growth Drivers
Brokerage firms have offered varied but generally positive assessments:
- Kotak Institutional Equities forecasts 16% YoY revenue growth for BEL in Q2, aligning with its FY27 guidance. They anticipate an improvement in EBITDA margin by 390 basis points sequentially to 28.9%, driven by stronger gross margins. Kotak highlights the critical importance of the Rs 300 billion Quick Reaction Surface-to-Air Missile (QRSAM) order, which awaits Cabinet Committee on Security (CCS) approval, especially given the 44% YoY decline in year-to-date order inflows to Rs 7,300 crore.
- MOFSL projects a 9% YoY rise in Q2 profit to Rs 1,403 crore and 16% YoY revenue growth, attributing this to robust execution of BEL's substantial opening order book of Rs 72,000 crore. However, MOFSL expects margins to fall by 170 basis points YoY to 27.7% due to a changing product mix. Key areas of focus for investors, according to MOFSL, include updates on major orders such as QRSAM, Uttam radars, next-generation corvettes, P75I submarines, and the status of the Advanced Medium Combat Aircraft (AMCA) prototype.
- Nuvama expects BEL to achieve a modest 13% YoY execution growth. The firm believes BEL's significant order backlog provides strong medium-term revenue visibility, with structurally healthy margins of around 28% supported by operational efficiencies and increasing localization efforts.
The finalization of large orders, efficient execution of the existing backlog, expansion of export share, and further indigenization of modules and subsystems are expected to remain critical growth drivers for BEL in the coming quarters.