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On Friday, UBS analyst Amit Mahawar upgraded Bharat Electronics (NSE:BAJE) Ltd (BHE:IN) stock rating from Neutral to Buy and increased the price target to INR450.00, up from the previous target of INR320.00. The upgrade was based on the expectation of a significant acceleration in the company’s order book from fiscal year 2025 to 2028. Mahawar anticipates a 17% growth in order book acceleration compared to the earlier estimate of 8%.
Bharat Electronics is poised to convert Rs2.4 trillion of its long-term pipeline into new orders amounting to Rs1.4 trillion within the same timeframe. UBS’s optimism is further bolstered by the successful integration and upgrades of major defense platforms by Bharat Electronics. These platforms include the Akash missile system, the Integrated Air Command and Control System (IACC), L70 gun upgrade, Schilka weapons system, and multiple radar systems that are now combat-proven.
According to the analyst, these achievements position Bharat Electronics favorably for securing both domestic and export orders or repeat orders. The firm’s valuation of Bharat Electronics is set at 45 times the 12-month forward price-to-earnings (PE) ratio. The revised price target reflects the belief that the market has underappreciated the company’s long-term pipeline and its potential for faster revenue conversion.
UBS now prefers Bharat Electronics over Hindustan Aeronautics Ltd (NSE:HIAE) (HNAL), citing better expected earnings growth and a sharper increase in the order book over the next three years. The upgrade and new price target reflect a positive outlook for Bharat Electronics in the coming years, as the company is expected to capitalize on its proven defense technology and expanded order book.
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