Diwali Samvat 2082 Stock Pick: Bharat Electronics Ltd – MNCL’s Expert Choice

Bharat Electronics Limited (BEL), established in 1954 under the Ministry of Defence, is one of India’s largest Defence Public Sector Undertakings (DPSUs) and a dominant player in defence electronics. Over the decades, BEL has evolved into a multi-product, multi-technology and multiunit enterprise, designing and manufacturing state-of-the-art systems across radars, missile systems, electronic warfare, avionics, C4I systems, naval systems, and military communications, while also expanding into non-defence domains such as smart cities, space electronics, AI, cybersecurity and EVMs. With a strong emphasis on research and development (R&D), continuous product innovation, and proven execution capability across multiple platforms, BEL has maintained leadership position supported by a depreciated asset base which provides cost advantages over newer private sector peers. BEL’s market leadership, strategic government backing, and robust R&D investments underpin a strong growth and revenue visibility profile.

Source: ACE Equity, MNCL Research

Price Performance

Source: ACE Equity, MNCL Research

Shareholding Pattern

Source: ACE Equity, MNCL Research

Largest Domestic Defence Electronics Manufacturer:

BEL, with 51.14% equity held by the Government of India, is of strategic importance as the country’s largest domestic manufacturer and dominant supplier of defence electronics to the Indian armed forces. Its scale advantage provides strong operating leverage, while government ownership ensures a steady inflow of orders — with ~80–90% of defence orders awarded on a nomination basis — translating into consistent order visibility and stable growth.

Robust Order Book Providing Strong Revenue Visibility:

As of Jun’25, BEL’s order book stood at ₹748.6bn (~3.2x TTM sales), with over ₹500bn slated for execution in the next two years. Key programs such as LRSAM, Akash missile system, BMP-II upgrades, LLTR Ashwini, MPR Arudhara radar, and Shakti EW systems form nearly 50% of the backlog. The management expects new order inflows of ~₹270bn in FY26, with potential large wins including QRSAM (~₹300bn, expected in Feb–Mar 2026), Next Generation Corvette systems (₹80–100bn), and advanced EW/avionics programs, supporting its strategy to maintain ~3x order book-to-sales and ensuring strong multi-year revenue visibility.

Strong R&D Focus and Advantage from Indigenous Procurement:

BEL’s sustained emphasis on research and development, structured through its three-layer R&D framework — Central Research Laboratories (CRL), Product Design & Innovation Centre (PD&IC), and Development & Engineering units (D&Es) attached to strategic business units — underpins its competitive edge. By consistently investing 6–7% of revenues annually in R&D, BEL has developed nextgeneration products and progressively increased indigenization, driving healthy profit margins. Coupled with the Government of India’s push for higher indigenous procurement under “Atmanirbhar Bharat”, BEL is well positioned to capture future revenue opportunities. 

Outlook & Valuation:

BEL is going to be benefitted from rising defence capital expenditure, the government’s indigenization drive, and modernization of the armed forces. Our DCF based Target price for BEL stands at Rs 463, with a potential upside of 12% from the current levels.

Exhibit 1: Key Financials (Consolidated)

Exhibit 2: Key Indicators

Source: Company BEL India, MNCL Research

STOCK PICKS FOR SAMVAT 2082

*Closing Price as on 10-10-2025

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