Bharat Electronics shares soared as much as 4% to its intraday high of Rs 379.90 on the National Stock Exchange after brokerages highlighted their bullish stance on the stock, after the management of the company reiterated an optimistic outlook.
The company expects Rs 30,000 crore worth of orders for Quick Reaction Surface to Air Missiles by March or April next year. The company also expects a potential order of up to Rs 40,000 crore from Project Kusha, the indigenous alternative to the S-400 air defence system, media reports suggested. The company said it is working as a development partner with the Defence Research and Development Organisation on the project.
BEL said it is awaiting a decision on the system integrator for the programme "If they decide to have two system integrators, then definitely we will be one of them," the company said.
The company is rightly positioned to benefit from the expected upcoming emergency procurement list and to cater to wider defence electronics components for the next few years, Motilal Oswal said as it maintained its ‘buy’ rating on the stock. Motilal Oswal raised the target price of the stock to Rs 410. BEL is expected to post strong margin on the back of increased indigenisation as well as continued research and development spend over years, the brokerage firm said.
Nuvama Institutional Equities, on the other hand, raised the target price to Rs 430 from Rs 385. It has a ‘buy’ call on the stock. Higher localisation of content, favourable product mix and operational efficiencies will drive growth for the company, Nuvama said.
BEL has posted robust gross margin over the past eight quarters, averaging 48%, Nomura said, and added that the increase in defence spending by Europe could also be positive for the company, as it has strong collaborations with major European original equipment manufacturers.
The company’s consolidated net profit for the March quarter rose over 18% on year, while its revenue during the period climbed 7% on year.