Bharat Electronics Share Price Target 2025

BEL is a Central Public sector undertaking that operates under the Department of Defence, Ministry of Industrial from Government of India which has been serving India’s defense electronics needs for many years. BEL was established in the year 1954 which initially manufactured communication equipment for Indian Armed forces but has grown over the years into multi-product, multi-technology and multi-unit organization catering to various sectors. After this blog reviews its history and the major strategies, drivers of growth, and performance of BEL that are outlined in the table below, the B/E blog estimates a target price for BEL’s stock by 2025.

Background information of Bharat Electronics Limited

Company Profile

BEL’S headquarters is in Bengaluru, for providing the Indian defense services with specialized electronic equipment. It has grown over the years and now has nine manufacturing divisions in nine different locations in India. The product portfolio is expanded with a set of defense and non-defense solutions: radar and communication, electronic warfare systems, avionics, optronic systems, tank electronics, network-centric solutions, SDR.

Key Business Areas of Bharat Electronics Limited

BEL’s primary business areas can be categorized as follows:

Defense Electronics: The competencies that define BEL’s operations are the delivery of sophisticated systems and solutions in the sphere of electronics for the Indian defence forces. The equipment they offer includes communication systems, radar systems, sonar systems and naval systems to mention but a few. More than 80% of the company’s revenue comes from Defence projects, and therefore, the company plays a vital role in the Defence of India.

Non-Defense Applications: BEL also expanded into other markets apart from defence namely, civilian radars, e-governance, smart cities, homeland security, and healthcare. The company has used the non-defence market to diversify and reduce risks of their revenue portfolios and opportunities.

Research and Development (R&D): Because of this autonomy, BEL has adopted a strong commitment of resources on research and development with approximately 7-8% of the company’s annual sales budget allocated towards this strategic sector. The company employes over 40 R&D laboratories located within the various Organizational subdivisions, engaged in creating yet new technologies and products.

Growth Factors for Bharat Electronics Limited

Several factors contribute to BEL’s growth trajectory, positioning it well for sustained success over the next few years:Several factors contribute to BEL’s growth trajectory, positioning it well for sustained success over the next few years:

Rising Defense Expenditure

The mobilization of the defense budget has increased gradually over the years due to global politics and also due to the plan of the Indian Government to impart specificity to the defense forces. The allocation towards defense in the Union Budget 2023-24 was increased by 13% which reflected the commitment of the country to ensure robust defense mechanisms. As defense expenditure increases all around the world. BEL, which is involved with defense electronics, is in a good position to benefit from this change.

Make in India and self-reliant India Initiative

Recently the Government of India has launched a campaign called the ‘Make in India’ programme with the ultimate goal of making this country a manufacturing nation. It has been aimed at clarifying the view of foreign investors regarding Australia’s defense sector and the Australian defense industry has been among the sectors selected under this mission. From the position of an automobile manufacturing company and an indigenous manufacturing plant, BEL can support the government in the realization of some of the existing strategic objectives, particularly in the area of import reduction and promotion of import substitution.

Strategic Partnerships and Diversification

BEL further uses Joint Ventures with both the domestic and foreign companies to improve on its technological platform as well as expand technology solutions offered to market. Partnerships with leading global defense players provide BEL with a license to new technologies that are subsequently indigenously developed for manufacturing. Also, the growth of sectors not related to defense maybe identified as a new source of revenue in BEL through, smart city solutions, homeland security, e-governance etc.

Focus on Exports

BEL is currently making serious efforts towards enhancing export business as a key activity of its international business strategy. Currently the company exports its products with a target of reaching $300 million of sales by the year ending 2025. Some of BEL’s exports are communication equipment, radars, electronic warfare systems and other products. In light of the ever increasing demands for defense equipment across the world particularly in the South East Asia region, Middle East and Africa region the export strategy holds the potential of enhancing the company’s revenue stream drastically.

Robust Order Book

Looking at BEL’s order book it is healthy which is indicative of the fact that there is a healthy demand for its products and services. BEL as of the year 2023, it had an order inflow of a little over INR 60,000 crores which gave the company a revenue clarification for the coming years. The order book has been grossly spread across defense electronics, radar and communication systems, avionics and civilian markets.

Financial Performance Overview

Revenue and Profit Trends

Analyzing its financial performance shows that this company has always recorded impressive results. Fiscal year 2022-23 written for the company is INR 15,000 crores with overall growth rate of around 12% from the previous year. The company’s net profit margin has also been very good and ranges from 15-17% which is very good for a company operating in the defence sector, which is normally capital intensive.

Healthy Balance Sheet

Currently, BEL is financially healthy as reflected in increased cash reserves and low long-term liabilities. The financial management of the company is wise thus enabling the company to allocate a lot of resources on R & D, while at the same time ensuring that shareholders get their reasonable dividend. The ROE has remained over 20% and this shows good use of BEL capital and proper return in investment.

Dividend Policy

Overall, from the earnings, BEL had always provided a fine return on the shareholders’ investment in terms of dividend. As for the dividend policy it is set to be at a range of 30-35% of the net profits for the purpose of distributing the dividends. It is comforting that Bel has consistent and sustainable cash flows together with increased order book for the next three years and plenty of indications that the company will continue to be friendly to its shareholders in future.

Bharat Electronics Share Price Financial Projections (2024-2030)

YEAR	SHARE PRICE TARGET
2024	₹307.71
2025	₹345.62
2026	₹355.63
2027	₹381.63
2028	₹401.48
2029	₹522.35
2030	₹544.21

Bharat Electronics Share Price Target 2025

In order to forecast the target price of BEL’s stock in the next fiscal year, i.e 2025 the following factors are to be considered: As a general rule of thumb, the first basic step while forecasting stock prices is the calculation of the expected growth in revenues and profitability of BEL; The second fundamental approach pertains to the valuation ratios which can be used to compare the current market price of BEL’s stock to the comparative multiples of similar stocks

Revenue Growth Projections

Considering the company’s new growth opportunities such as rising defense budget, export market, diversification into non-defense markets, and its order backlog, the company might achieve a CAGR of 10-12% for the next two years. Consequently, BEL’s may hit INR 19,500 crores to INR 20,000 crores within the fiscal year 2025.

Net Profit Margin Projection

As a result of the past performance of the company and the perceived operating synergies, net profit margins are forecasted at 15 to 17 percent. By assuming the revenue for the financial year 2025 as 19,500 crores INR and assuming the net profit margin to be 16 % the value calculated is approximately 3,120 crores INR.

Simple Course to valuation multiples and target price calculation

At present, the stock of BEL is available at a P/E ratio of almost 22.” Thus, looking for the better growth rate and improving a stable earnings profile, the P/E multiple may rise to 24× by 2025, motivated by improving investor attention to the defense industry and BEL’s competitive position in it.

Taking an estimate of INR 3,120 crores of net profit for the fiscal of 2025 and assuming an expected P/E multiple of 24x, the market capitalization may be approximated to about INR 74790 crores. When this is divided by the number of shares outstanding – which is nearly 2,437 million – it is possible to arrive at an estimated target price per share of as much as INR 307 by 2025.

Risky Factors

Dependency on Government Orders:

It is conspicuous that the major and perhaps the largest proportion of BEL’s revenues comes from the orders placed by the Indian government. Any cut in government expenditure could have an impact on the company’s performance since it is its major source of income.

Geopolitical Risks:

BEL has operations that are directly affected by geopolitical risks since the company’s major products are developed with export markets as well as international partnerships in mind.

Technological Disruptions:

The foremost threat that has been identified with respect to BEL is that of obsolescence due to the fast pace of developing technological landscape. Namely, the analyzed company has to invest much in R&D in order to remain competitive on the market.

Competition from Private Players:

It has been observed that the government has been promoting private participation in the defense production and hence BEL could face competition both, nationally and globally.

Also Read: Top 30 companies listed in Bombay stock exchange

Conclusion

BEL, being an Indian Navratna Company, has bright prospects for future growth propelled by favorable government policies, over 100 billion order book, diversification in segments other than defense segments and rising importance of exports. However, the company possessed certain risk since its investments but still the sound fundamentals and strategic management give a positive signal. On that basis and considering current trends and projections it will be possible to get to the Bharat Electronics Share Price Target 2025 is INR 370 , which will be upside for investors. However, care should be taken so that they do not expose themselves to such risks and they should keep abreast of the changes that occur with the defense sector and other market indicators.

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