Bharat Electronics Shares Rise as Brokerages Optimistic on Q4 Show; Should You Buy, Sell, or Hold?

Bharat Electronics, a key player in the defense electronic systems sector, has reported a robust performance for the fourth quarter of FY2025. With an 18.4 percent increase in consolidated net profit and a strong outlook for future orders, the company has captured the positive attention of brokerages. As shares rise, experts weigh in—should you buy, sell, or hold?

Market Reaction

• Bharat Electronics shares gained on the NSE following a positive analyst call.
• The stock was trading at Rs 366.6 per share, up by 0.8% as of 9:20 AM on May 21.
• Brokerages such as Nuvama Institutional Equities and Motilal Oswal have issued favorable ratings.

Earnings Breakdown

• The company posted a consolidated net profit increase of 18.4% to Rs 2,127 crore in Q4 FY2025.
• Total revenue from operations rose by 6.8% to Rs 9,149.6 crore.
• This growth is attributed to higher localization content, favorable product mix, and operational efficiencies.

Strategic Takeaways

• Bharat Electronics expects orders worth Rs 30,000 crore for Quick Reaction Surface to Air Missiles by March or April next year.
• There is an impending order for corvettes for the Indian Navy.
• The management is actively engaged in discussions for various projects across the Army, Navy, and Air Force.

Brokerage Insights

Nuvama Institutional Equities

• Increased target price to Rs 430 from Rs 385.
• Positioned to benefit from emergency procurement and wider defense electronics components.
• Continued growth anticipated through indigenization and R&D investments.

Motilal Oswal

• Upheld a 'buy' rating with a target price of Rs 410.
• BEL’s strong margin performance highlighted by increased indigenization efforts.
• BEL’s order prospect pipeline remains robust for the next couple of years.

Nomura

• Emphasized BEL’s gross margin exceeding expectations.
• Average gross margin over past eight quarters is 48%.
• Reiterations were made due to collaborations with major European OEMs and increasing defense spending by Europe.
• Reaffirmed a 'buy' rating with a target price of Rs 363.

Risk Factors

• Despite exceeding projections, BEL’s order inflow for FY25 was lower than initial guidance.
• Ongoing geopolitical tensions could impact defense spending and order fulfillment.
• Fluctuations in forex rates might affect financial outcomes.

Conclusion

Bharat Electronics has showcased strong quarterly performance and promising future prospects. With positive brokerage sentiments and a host of strategic collaborations, the company holds potential for steady growth. For investors looking to position themselves within the defense electronic systems market, now might be an opportune time to consider adding Bharat Electronics stocks to their portfolio. However, one should weigh the potential risks and market fluctuations before deciding to buy, sell, or hold.