Trusted share market advisory firm-Bharat Electronics' upbeat Q3 earnings, strong growth prospects garner praise from brokerages

BEL Q3: Brokerages assign price targets of upto Rs 370 for Bharat Electronics, driven by the Navratna defence company's solid execution, lofty order book and massive margin beat.
Navratna defence company Bharat Electronics reported upbeat Q3 numbers, combined with an equally optimistic management commentary which has garnered much praise from brokerages. Analysts on the Street remain confident of the company's strong growth in the future, largely banked on its hefty order book and superior margins.
Shares of the company also rose for a second straight session on January 31, gaining nearly 3 percent driven by the company's solid Q3, positive commentary and bullish brokerage views. At 09.32 am, BEL shares were trading at Rs 284.30 on the NSE. The stock had surged 4 percent in the last session.
Bharat Electronics reported a 37 percent on year jump in its revenue for the December quarter to Rs 5,643.25 crore whereas net profit rose a whopping 47 percent to Rs 1,316.06 crore. However, the highlight of the show was the massive 330 basis point on year expansion in BEL's EBITDA margin to 28.7 percent in Q3, which beat the company's own guidance of 23-25 percent for the past six–eight quarters. The margin was also much higher than the Street's anticipated 23.7 percent.
According to Jefferies, this margin strength adds confidence over the sustainability of BEL's profitability. Jefferies retained its 'buy' call on BEL with a target price of Rs 370.
Brokerage firm Nomura raised its FY25 EBITDA margin and earnings-per-stock-estimates for the stock by 200 basis points and 8 percent, respectively, to make up for the significant operational beat in Q3. Nomura has a 'buy' call on BEL with a target price of Rs 363.
Along similar lines, Nuvama Institutional Equities also lifted its FY25-27 EPS estimates for BEL by 2-11 percent, also marginally raising its price target for the stock to Rs 350. Nuvama also holds a 'buy' call on BEL.
Meanwhile, the management also sounded optimistic of future growth, showcasing confidence about securing order inflows of Rs 25,000 crore by the end of the FY25, up from the current Rs 11,000 crore, driven by a strong project pipeline and solid execution. "Many projects are in the pipeline, and we are hopeful of securing several in the next two months," said Manoj Jain, CMD of BEL.
Despite that however, the company retained its sales and margin guidance for FY25 unchanged, taking on a conservative stand. Regardless of that, Nomura expects BEL to witness heavy ordering in Q4.
Nuvama also feels the company's healthy order book of Rs 71,100 crore and a pipeline of over Rs 1 lakh crore provides comfort for future growth. The firm has picked Bharat Electronics as its top sectoral choice, highlighting its hefty order book (3.5x FY24 sales) and consistent execution outperformance, supported by higher localization and improved cost efficiencies, driving sustained earnings momentum.
"We believe BHE has more positive catalysts/triggers than negative ones, and has further scope for a re-rating given it has been consistently beating its own guidance on profitability," Nuvama wrote in a note.
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