Bharat Electronics (BHE IN) – Q3FY26 Result Update – Strong Q3; prospects remain intact – Downgrade to ‘REDUCE’
Published on 29 Jan 2026
Bharat Electronics (BEL) reported a strong quarterly performance with revenue rising by ~23.7% YoY with EBITDA margin expanding by 101bps YoY to 29.7%. Management reiterated its revenue growth guidance of ~15% and order inflows exceeding ~Rs270bn (ex. QRSAM), supported by robust execution capabilities and a strong outlook for Q4FY26. The prospect pipeline for FY27 has been identified at over ~Rs250bn. While 9MFY26 EBITDA margins are unlikely to be sustained due to an unfavorable product mix from orders scheduled for execution in Q4FY26, ongoing supply-chain improvements and BEL’s increasing vertical integration, particularly in semiconductors (20-30% of total cost), are expected to enhance operational efficiencies. BEL also remains confident of securing the AMCA RFP in consortium with L&T and is targeting an improvement in its non-defence revenue mix from the current 6-7% to 10-15% in mid-to-long term, driven by growing traction across railways, metros, aviation and space technologies, as well as data centre solutions. The stock is trading at a P/E of 47.5x/41.2x on FY27/28E earnings. We revise our FY27/28E eps estimates by 0.9%/1.1% factoring in robust prospects and downgrade our rating from ‘Hold’ to ‘Reduce’ given the recent sharp run up in the stock price. We value the stock at a PE of 40x Sep’27E (same as earlier) arriving at a TP of Rs411 (Rs407 earlier).
