Axis Capital downgrades Bharat Electronics stock to Reduce after rally

Published 07/07/2025, 05:42
Axis Capital downgrades Bharat Electronics stock to Reduce after rally

Investing.com - Axis Capital (NYSE:AXS) Limited downgraded Bharat Electronics (NSE:BAJE) Ltd (BHE:IN) from Add to Reduce on Monday, maintaining a price target of INR400.00 following the stock’s significant outperformance.

The research firm noted that Bharat Electronics has outperformed the Nifty index by approximately 33% since the Indo-Pak conflict in early May 2025, which demonstrated the effectiveness of the company’s products and triggered a market rerating.

Axis Capital believes positive developments, including Defense Acquisition Council approval for QRSAM (Quick Reaction Surface to Air Missile), expectations of increased Indian defense budget, and potential export growth, are already reflected in the current share price.

The firm highlighted that Bharat Electronics’ EBITDA margin, execution efficiency, and receivable days are at their historical best levels, while the stock’s valuation has reached a lifetime high.

Axis Capital maintained its price target of INR400, representing a multiple of 41.5x June 2027 estimated P/E, and cautioned about historical instances of delays in lumpy contract awards and elongated receivable periods.

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