PL Capital keeps Bharat Electronics among its top defence picks into Q4

what happened

Brokerage PL Capital still regards Bharat Electronics Ltd (BEL) as a preferred name in the defence sector. The firm expects growth to be supported by fresh order inflows, demand for defence electronics and domestic manufacturing. Its target price for the shares is ₹452, implying roughly 26% upside from current levels. Research analyst Amit Anwani models topline growth of 14–15% for BEL this quarter and a margin of about 26.5%.

Beyond its core defence business, BEL has exposure to cybersecurity, civil projects and electronic voting machines (EVMs), and has also worked on projects for Delhi Metro Rail Corporation (DMRC). PL Capital does not expect these non-defence areas to gain much weight soon: they currently make up about 10–15% of operations, and the brokerage sees them growing around 15%. The bigger driver is defence contracts for the QRSAM quick reaction surface-to-air missile system, next-generation aircraft and naval platforms, which could improve revenue visibility through FY31.

Anwani expects revenue at defence companies in his coverage universe to rise about 18–20% this quarter. Solar Industries is projected to grow more than 45%, helped by its international explosives business, while Hindustan Aeronautics (HAL) is seen growing 10–11% with margins near 27%. Platform and shipbuilding segments may grow more slowly because of the timing of new orders. BEL has so far received orders worth about ₹9,000 crore against its ₹25,000 crore guidance for the year.

why it matters

For investors, the key question is timing. The brokerage thinks several clearances could arrive in January, February and March, so execution pace and order inflows will remain the main factors to watch. The fall in defence stocks from their 52-week highs reflects worries about order visibility. Anwani argues the slowdown in order inflows could prove temporary, given large recent procurement announcements and the government's focus on strengthening domestic defence capabilities.

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