BEL shares traded lower on Thursday, falling 2.65% to Rs 441 on the NSE, after touching an intraday low of Rs 438. The stock slipped as investors weighed Nomura’s cautious stance, despite the company delivering better-than-expected quarterly results.
Nomura’s research note pointed out that BEL’s 3QFY26 standalone revenue grew 24% year-on-year to Rs 71.2 billion, beating both Nomura’s and consensus estimates by 8% and 7%, respectively. Gross margin contracted by 152 basis points to 46.5%, coming in 192 basis points below Nomura’s estimate. However, the impact of margin compression was offset by improved operating leverage, with other expenses falling by 240 basis points as a percentage of sales. Consequently, EBITDA margin expanded to 29.7%, rising 101 basis points year-on-year and exceeding estimates. EBITDA stood at Rs 21.2 billion, up 28% year-on-year, while recurring PAT rose 21% to Rs 15.9 billion, beating estimates by 8%.
The company’s order backlog stood at Rs 730.2 billion as of December 2025, up 3% year-on-year. The company said that this implies an order inflow of Rs 56.8 billion during 3QFY26, which was broadly in line with estimates. The brokerage added that BEL has already achieved 71% of its FY26 order inflow guidance of Rs 270 billion, indicating that the company is well placed to meet its full-year target.
On its earnings call, Bharat Electronics Ltd (BEL) maintained its FY26 guidance, reiterating a target of Rs 270 billion in order inflows, 15% revenue growth, and a 27% EBITDA margin.
Nomura highlighted several large upcoming orders, including a Rs 24 billion LCA-related contract from HAL, a Rs 20–30 billion Next Generation Corvette order, and ₹30 billion from the Shatrughat project. The brokerage expects the QRSAM program to contribute Rs 300–320 billion in order inflows by 4QFY26 or 1QFY27, while Akash NG orders are projected in FY28.
Nomura further noted that semiconductor chips account for 20–30% of BEL’s bill of materials, but the company is not facing major shortages as its required chip designs are generic, and it has begun designing its own chips. R&D expenditure is expected to rise to Rs 17–20 billion for FY26–FY27, and the company aims to increase its exports and non-defence revenue share in the medium to long term.Nomura has increased earnings forecasts by 2–3% due to improved operating leverage. The brokerage’s FY27–28 sales estimates are 4–6% below consensus, as major orders such as QRSAM are expected to see more back-ended execution. Nomura projects a PAT CAGR of 14% for FY26–28, compared with 27% over FY22–26.
Despite the strong order pipeline and healthy execution, Nomura maintained a Neutral rating, pointing to rich valuations. The brokerage said BEL is trading at 49x FY27F earnings, compared with a one-year forward average P/E of 32x, and thus has limited upside. Nomura has rolled forward its valuation and retained a 42x multiple on March 2028 EPS, resulting in a revised target price of Rs 454.
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