New Delhi: Operation Sindoor not just rocked the terrorist camps of the Pak-sponsored agency but also has made a significant impact on the stock market too. There has been a significant rise in defence stocks in the last few days. The defence stocks have been rallying and generating significant returns. The market, overall, has seen a correction, but defence stocks have been an outlier to this. Amidst all of these developments, UBS, a major investment banking firm, has increased its rating for one such defense stock, namely Bharat Electronics (BEL).
The rating of BEL has been upgraded to “Buy” from “Neutral” and has been given a new target price by UBS. The new target price is estimated to be Rs 450 per share from the erstwhile Rs 320. BEL stock was at Rs 383.60 at the closing time, as per BSE data.
According to UBS, BEL is showing a stronger case of opportunities for rapid growth. The company has a pipeline of projects worth Rs 2.4 lakh crore, out of which new orders worth Rs 1.4 lakh crore can be converted in FY25-28. BEL is in a healthy condition to get orders in both domestic and export markets. UBS has said that BEL should now be valued at 45x price-to-earnings (PE) multiple and that it is being undervalued in the stock market.
Tremendous momentum is seen in orders and business. The earnings and margins of BEL have seen significant improvement in the last two years. The pace of getting orders for the company is expected to increase after FY25. UBS opined that BEL’s compound annual growth rate (CAGR) could be around 33 percent during FY26-28. The EBITDA (earnings before tax deductions and amortization) margin is expected to be around 27 percent in FY25.EPS (earnings per share) is expected to reach Rs 7.28 in FY25, Rs 8.06 in FY26, and Rs 9.54 in FY27.
BEL, a Navratna PSU under the aegis of the Ministry of Defence, is particularly known for manufacturing defence equipment such as Akash Missiles, the IACCS Control Number, and the QRSAM Missile System. The latest venture that it steps into is the electronic warfare system, which is fully tested and ready for use. BEL’s strength lies in its advanced defense systems and research-oriented approach. The company is valued at Rs 2.8 lakh crores as per the BSE data.
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