Buy Bharat Electronics; target of Rs 490: Motilal Oswal

Motilal Oswal's research report on Bharat Electronics

BHE’s 1QFY26 PAT exceeded our estimate, driven by better-than-expected margins. Revenue growth was aided by a strong order book, though it was affected to some extent by geopolitical issues. The order book was strong at INR749b and order inflows stood at INR76b. The company has maintained its guidance on revenue and order inflows and expects margins to remain strong at 27%. We expect the company to benefit from emergency procurement and the finalization of larger platform orders from the Army, Navy and Air Force. We also expect BHE to benefit from incremental opportunities in exports as defense spending increases globally. We marginally tweak our estimates and maintain BUY with a TP of INR490 based on 45x Sep’27E EPS.

Outlook

BHE is currently trading at 47.0x/39.3x/33.0x on FY26E/FY27E/FY28E EPS. We maintain our two-year forward TP of INR490 based on 45x Sep’27E earnings and maintain BUY rating on BHE.

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