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On Wednesday, CLSA analyst Bharat Parekh increased the price target on Bharat Electronics (NSE:BAJE) Ltd (BHE:IN) to INR423 from INR294, while retaining an Outperform rating on the stock. The revision follows the company’s announcement that it has overcome a slowdown in inflows and backlog for FY25. The defense electronics firm is anticipated to secure a substantial $6 billion in order wins within the next 15 months, which represents 84% of its backlog.
Bharat Electronics has recently reported that it expects a significant uptick in order inflows for FY26, projecting a 44% increase following tensions between India and Pakistan. The Indian government’s push for ’Make in India’ defense orders is a contributing factor, with decisions on these orders expected in the week starting May 26, 2025. Despite a reduction in backlog by 6% year-over-year, the company has guided towards a strong financial performance for FY26, including record revenue, Ebitda margin, and capital expenditures.
The company’s Ebitda margin for the quarter was notably higher than anticipated, increasing by 385 basis points year-over-year and surpassing its guidance of 23%-25%. This margin expansion has been a key driver for the raised earnings per share (EPS) estimates for FY26 and FY27, leading to the new price target of INR423.
With a robust three-year backlog valued at approximately $8.4 billion, Bharat Electronics is positioned to benefit from a considerable pipeline of orders, estimated at around $12 billion, over FY26-28. This optimistic outlook comes despite the stock’s relative outperformance, with a 27% gain over the past 12 months.
Parekh’s statement highlighted the company’s strong margin performance and the anticipated inflow of orders as central to the positive assessment. The firm’s strategic positioning and the government’s accelerated defense initiatives appear to set the stage for sustained growth in the coming years.
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