Multibagger defence stock set to zoom further as company's FY24 order book likely to breach Rs 25,000 crore

For the defence major Bharat Electronics Limited (BEL), domestic brokerage ICICI Securities remains bullish with a ‘buy’ rating and a target price of Rs 203, which implies a potential upside of over 21 per cent from the last close.

The buy rating on the counter has been retained by the brokerage after the company bagged an order worth Rs 4,522 crore from the Indian Army for the supply of fuses of various calibres. 

Indigenisation of critical technologies was the key requirement of the tender, the company’s press release added.

“The company has also received additional orders worth Rs 356 Crores since the last disclosure on 6th Dec 2023 and the said orders pertain to other products like EW (Electronic Warfare) Testers, Medical Systems (Exports), Consumables and Batteries for Electronic Voting Machines (EVMs), Night Vision Devices Spares and Services,” it added.

With the above, BEL has cumulatively received orders worth Rs 23,176 crore (excl. taxes) in the current financial year 2023–24.

Order inflows for FY24 to breach Rs 25,000 crore

The brokerage said that the company’s current order inflow is ahead of the management’s guidance of Rs 20,000 crore. Furthermore, ICICI Securities expects the FY24 order inflow to be over Rs 25,000 crore, as there are expected orders worth Rs 2,000–2,500 crore pertaining to naval platforms.

Taking cognisance of FY24’s order inflow already being in excess of guidance and steady execution, the brokerage raises its valuation multiple to 30x (earlier 28x) FY26E earnings per share (EPS).

Besides, "we expect orders pertaining to QRSAM in H1FY25 to further bolster the order book," the brokerage added.

Earlier, the brokerage maintained that among all defence PSUs, BEL enjoys the benefits of being present on various platforms across services, allaying the risk of budgetary allocation. 

It also held that the company’s impressive order inflow, despite FY24 being a pre-election year, lends certainty to BEL’s execution.