Bharat Electronics Ltd (BEL) share price surged 5 percent on January 31, a day ahead of the Union Budget 2025, with the PSU stock breaking above its key averages. The defense stock closed at Rs 292.65 on NSE, slightly off its intraday high of Rs 294.2.

The rally saw BEL shares trading above its 50-day, 100-day, and 200-day volume-weighted average prices (VWAP), with trading volume exceeding 5 crore shares on NSE and BSE combined—nearly 2.5 times its 20-day average volume. The stock has gained 8.3 percent this week and has jumped over 60 percent in the past year.

Brokerages bullish on BEL shares after Q3 margin outperformance

BEL's recent surge comes on the back of its robust December quarter (Q3 FY25) results and upbeat management commentary, which has drawn positive reactions from brokerages. The Navratna defense PSU reported a 37 percent year-on-year (YoY) revenue jump to Rs 5,643.25 crore, while net profit soared 47 percent to Rs 1,316.06 crore.

However, the standout metric was its EBITDA margin, which expanded by a massive 330 basis points YoY to 28.7 percent, significantly exceeding its guidance of 23-25 percent. The margin also came in well above the Street’s expectations of 23.7 percent, prompting several brokerages to revise their estimates and maintain a bullish stance on the stock.

BEL stock price targets raised; brokerages see further upside

Jefferies retained its ‘buy’ rating on BEL with a target price of Rs 370, citing confidence in the sustainability of its strong margins.

Nomura also raised its FY25 EBITDA margin and earnings-per-share (EPS) estimates by 200 basis points and 8 percent, respectively, in light of BEL’s operational beat in Q3. It reaffirmed its ‘buy’ call with a target price of Rs 363.

Similarly, Nuvama Institutional Equities raised its FY25-27 EPS estimates by 2-11 percent, lifting its target price slightly to Rs 350 while maintaining a ‘buy’ call.

Strong order pipeline and management guidance support a bullish outlook

BEL’s management remains optimistic about future growth, projecting order inflows of Rs 25,000 crore by the end of FY25, up from the current Rs 11,000 crore, supported by a strong project pipeline.

Nomura expects BEL to witness heavy ordering in Q4, while Nuvama highlighted the company’s robust order book of Rs 71,100 crore and a pipeline exceeding Rs 1 lakh crore as key factors driving long-term growth. The firm noted that BEL’s hefty order book, equivalent to 3.5 times its FY24 sales, combined with higher localization and improved cost efficiencies, positions it for sustained earnings momentum.

"We believe (Bharat Electronics) has more positive catalysts/triggers than negative ones and has further scope for a re-rating, given its consistent profitability beat," Nuvama said in a note.

Nomura also expects BEL to secure Rs 85,000 crore in total order inflows between FY25 and FY27, including large contracts such as:

1) Rs 25,000-30,000 crore for the Quick Reaction Surface-to-Air Missile (QRSAM) system in FY26

2) Rs 15,000 crore for the Medium Range Surface-to-Air Missile (MRSAM) and MFSTAR radar system for next-gen corvettes in FY27

3) Rs 8,000-10,000 crore for radars, electronic warfare, communication, and missile systems from FY25-FY27

Outlook: Can BEL stock sustain the rally post-budget?

BEL’s strong financial performance and promising order book have positioned the stock for further gains, with analysts confident about sustained momentum. The stock’s breakout above key moving averages signals bullish sentiment, but market watchers will closely track upcoming order wins, execution progress, and any defense-related policy announcements in the Union Budget 2025 that could impact the sector.