Defence stock to buy now for an upside of 25%; Recommended by Jefferies

Synopsis:- The defence PSU remains in focus after broker upgrades, with target prices raised to  Rs 565, implying 28% upside. Strong Q3 performance, 30% operating margins, 71% achievement of FY26 order inflow targets, and a solid  Rs 73,015 crore order book continue to support long-term growth optimism.

India’s defence sector has surged ahead in FY25, achieving record production of  Rs 1.51 lakh crore, up 18% YoY, with exports hitting  Rs 23,622 crore, a 12% rise. The FY26 budget allocates  Rs 6.81 lakh crore, a 9.5% increase, prioritizing modernization and self-reliance amid capital outlay of  Rs 1.8 lakh crore. This momentum underscores India’s strategic push toward indigenous capabilities and global defence exports. 

With a market capitalisation of Rs 3,34,605.13 crore, the shares of Bharat Electronics Ltd were trading at Rs 457.75 per share, increasing around 2 percent, as compared to the previous closing price of Rs 449.00 apiece. The Government of Singapore holds a 1.01 percent stake in the company 

Brokerage Recommendations

Jefferies turned bullish on the defence stock, issuing a ‘Buy’ rating with a target price of  Rs 565 per share. This implies a potential upside of 24% from the current market price of  Rs 457.05, reflecting confidence in the company’s earnings outlook and medium-term growth prospects.

The brokerage noted that BEL’s December-quarter EBITDA exceeded expectations by 14%, supported by stronger-than-anticipated revenue and margin performance. It also highlighted that margins for the first nine months of FY26 were at 29.3%, comfortably above the company’s guidance of over 27% and broadly in line with its estimates.

Jefferies noted that BEL has already met 71% of its FY26 order inflow target of  Rs 27,000 crore, reflecting a strong 39% year-on-year growth. The brokerage remains confident of over 15% revenue growth this year, adding that the India-EU trade agreement could aid R&D and future orders, with clearer visibility in the next 3–6 months.

Bharat Electronics remains firmly on broker radars following a strong Q3 performance. JPMorgan raised its price target to Rs 556, backed by better-than-expected revenue, EBITDA, and profit growth, while retaining an Overweight rating. CLSA reiterated its Outperform view, citing strong order inflows, healthy margins, and improved visibility on the  Rs 30,000 crore QR-SAM project, supporting long-term growth confidence.

Q3FY26 Highlights

Recently, the company announced its financial performance in Q3FY26, in which revenue increased by 24 percent on a year-on-year basis from Rs 5,770 crore in Q3FY25 to Rs 7,153.85 crore in Q3FY26. However, on a Quarter-on-Quarter basis, revenue increased by 24 percent from Rs 5,792 crore in Q2FY26 to Rs 7,153.85 crore in Q3FY26.

Moreover, the company delivered strong profit growth in Q3FY26, with net profit rising 21% year-on-year to  Rs 1,579 crore, reflecting improved operational performance. On a sequential basis, profit increased 23% quarter-on-quarter, supported by higher execution, better cost control, and sustained margin strength during the quarter.

BEL reported a 27.3% year-on-year rise in EBITDA to  Rs 2,127 crore from  Rs 1,670 crore. Better cost control and operating leverage led to margin improvement, with operating profit margin expanding to 30% from 29% a year ago, underscoring sustained profitability momentum.

The company’s order book stood at  Rs 73,015 crore as of January 1, 2026, marginally lower than  Rs 74,453 crore reported on October 1, 2025. The slight decline indicates steady execution and order inflows broadly keeping pace, reflecting stable demand visibility and a healthy project pipeline going forward.

Bharat Electronics Limited (BEL) is a leading Indian defence electronics company and a Navratna PSU. It designs and manufactures advanced electronic systems for defence and aerospace applications, with a growing presence in non-defence segments such as homeland security, smart cities, and space electronics, supporting India’s self-reliance and technological advancement.

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