Defence Stock Picks: UBS adds this PSU to its APAC 'key call' list; Sees 37% upside

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Global investment banking firm UBS has included defence equipment manufacturer Bharat Electronics Ltd.(BEL) as part of its "UBS APAC Key Call List" in its latest note on Thursday, November 12.

UBS has maintained its "buy" recommendation on BEL, and has raised its price target on the stock to ₹550 from ₹500 earlier. The revised price target implies an upside potential of 37% from current levels.

According to the UBS note, the market underappreciates BEL's medium-term earnings growth potential, citing orders worth over ₹2 lakh crore that the company has managed to bag over the last decade.

UBS expects Bharat Electronics' revenue and Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) to grow at a Compounded Annual Growth Rate (CAGR) of 18% each over financial year 2027-2030, led by higher earnings visibility and limited downside risks to the company's margins.

The recent correction seen in shares of BEL presents shareholders with an attractive opportunity to accumulate the stock, according to the UBS note. The firm highlighted BEL's superior earnings quality and competitive positioning across segments in comparison to its peers are some of the key factors behind its bullish stance.

BEL's September quarter results were a beat across the board, with revenue growth of 27%, well above the poll expectation of 15%. On a trailing 12-month basis, BEL's order book stood at ₹68,720 crore, having received orders worth ₹7,660 crore in the first half of the current financial year.

The management is still optimistic about receiving orders worth ₹55,000 crore for financial year 2027.

BEL is a "near-consensus buy" among the analysts as 38 out of the 39 analysts have a "buy" recommendation on the stock and one solitary analyst has a "sell" recommendation.

Shares of Bharat Electronics are trading little changed on Thursday at ₹399. The stock has risen 7% in the last one month, thereby wiping out all the losses for the year.

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