1% Dividend Yield, 70% Payout: Defense Stock Bharat Electronics Recommended To Buy For Rs 210 TP

One of the leading aerospace and defence companies, Bharat Electronics (BEL) will be turning ex-dividend next week. BEL which has one of the highest dividend yields in defence segment, will be rewarding shareholders with a 70% payout anytime soon. Ahead of the ex-dividend date, brokerages have recommended holding, accumulate and buying BEL shares. The highest target price on BEL is of Rs 210 per share.

Bharat Electronics Share Price:

Last week, on Friday, BEL shares ended at Rs 184.50 apiece, up by 0.60%. The company has a market cap of Rs 1,34,865.42 crore.

At present, BEL shares are up by 109% from its 52-week low of Rs 88.30 apiece.

Bharat Electronics Dividend:

As per the regulatory filing, the company has declared an interim dividend of Rs 0.70/- per equity share of Rs 1 each fully paid-up (70%) for the financial year 2023-24. The interim dividend will be paid within 30 days from the date of declaration.

Further, BEL fixed Saturday, the 10th of February, 2024 as Record Date for the purpose of payment of Interim Dividend on Equity Shares for the Financial Year 2023-24. Since February 10 is a Saturday, the share price will turn ex-dividend on February 9.

Currently, BEL shares have a dividend yield of 0.98%, which is among the highest in the defence segment. In 2023, the company paid dividends up to 180% amounting to Rs 1.8 per share.

Bharat Electronics Share Target Prices:

JM Financial:

We remain positive on the stock given 1) robust order inflows (surpassing FY24 inflow guidance), 2) strong OB providing healthy revenue growth visibility, 3) margin improvement 4) robust order pipeline and 5) improving return ratios (ROE likely to expand to 26.2% by FY26 vs 23.4% in FY23). We expect Revenue/EPS CAGR of 17%/19% over FY23-26E. We maintain a BUY rating on the stock with a revised TP of Rs 210 based on 30x FY26E EPS (vs 25x Sep'25E earlier). Key risk is delay in conversion of the expected bid pipeline and prolonged disruption in component supply chain due to various geo-political conflicts.

BHE has declared an interim dividend of Rs 0.7/share. Management indicated that BHE can meet the lower end of revenue growth guidance of 15% for FY24 and EBITDA margin at the upper end of guidance at 23%. Cumulative order inflow for FY25 and FY26 is guided to be Rs 500bn, majorly driven by QRSAM (cRs 200bn).

Prabhudas Lilladher:

We remain positive on BEL's long-term growth story given 1) strong order backlog & pipeline, 2) diversification into non-defence verticals like metros, civil aviation, IT infra, etc. 3) focus on export markets, and 4) govt's push on indigenization in defence. The stock is currently trading at a P/E of 33.2x/28.6x FY25/26E. We roll forward to FY26 and value the stock at a P/E of 28x FY26E (24x Sep-25E earlier) with a revised TP of Rs182 (Rs143 earlier) owing to robust order inflows & healthy execution outlook. Downgrade to 'Hold'.

Management estimates ~Rs500bn cumulative order inflows over FY25 & FY26, factoring in Rs200bn QRSAM orders from the Indian Army and Air Force. Other defence prospects include BMP upgrade, EW systems, Ashwini radar, airborne missile systems, anti-drone systems, ship upgrades/refits, etc. While defence vertical is expected to grow faster, there are opportunities in non-defence areas such as metros, civil aviation, IT infra, smart cities and cyber security.

Elara Capital:

We up FY24E/25E/26E EPS 5%/4%/7% on strong inflows and higher other income. We raise our TP by 5% to Rs 195 from Rs 185 on 27x (unchanged) December 2025E P/E, at three-year average, one-year forward multiple. We reiterate Accumulate, led by India's indigenisation story in the defence space. Expect an earnings CAGR of 22% in FY23-26E with an ROE and ROCE of 25% each through FY24-26E.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.