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BEL shares upgraded by UBS on better order flows, execution; check raised price target

Published on: May 23, 2025, 7:10 am

Source: CNBCTV18

Shares of state-run Bharat Electronics Ltd. (BEL) have been upgraded by brokerage firm UBS on Friday, May 23. The brokerage has also raised its price target on the defence equipment manufacturer by 40%.





UBS has upgraded BEL to "buy" from its earlier rating of "neutral" and raised its price target to ₹450 from ₹320 earlier. The revised price target implies a potential upside of 18% from Thursday's closing levels. UBS' price target on BEL is the highest on the street for the stock, followed by JPMorgan's ₹445.





The brokerage said that it expects significant order book acceleration for BEL between financial year 2025 and 2028, which is a key factor behind the upgrade. A long-term order pipeline of nearly 2.4 lakh crore is likely to be converted into orders.





"With major platforms that have been integrated or upgraded by BEL, including the Akash Missile System, the IACC control system, the L70 gun upgrade, Schilka weapons system and multiple radars, now combat-proven, BEL could book orders or repeat orders in both domestic and exports market," UBS wrote in its note.





UBS believes that BEL's long-term order pipeline, coupled with a faster translation into revenue, is underappreciated by the market.





BEL has now become UBS' preferred pick within the defence space, based on better expected earnings growth and a sharper ramp-up of the order book over the next three years. The brokerage had recently downgraded HAL to "neutral" from its earlier rating of "buy".





The brokerage values BEL at 45 times 12-month forward price-to-earnings, which is at the higher end of the range, to factor in the upside risk to earnings and order flow, both locally and globally, due to the recent turn of events.





During its earnings call recently, BEL had highlighted that it expects order inflow worth up to ₹27,000 crore in the new financial year. This is excluding the Quick Reaction Surface-to-Air Missile order, which, on materialisation, could bring in further inflows worth up to ₹30,000 crore.





Out of the 29 analysts that have coverage on BEL, 25 of them have a "buy" rating on the stock, while two analysts each have a "hold" and "sell" rating.





Shares of BEL ended little changed on Thursday at ₹383.5.

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