First Read: Bharat Electronics "Q4FY26: Execution edge drives sustained growth"

研报英文原文证据摘录

First Read: Bharat Electronics "Q4FY26: Execution edge drives sustained growth"

Forecast returns

Forecast price appreciation 20.9%

Forecast dividend yield 1.0%

Forecast stock return 21.9%

Market return assumption 11.8%

Forecast excess return 10.1%

Company Description

Bharat Electronics (BHE) is a state-owned enterprise established in 1954 under the Ministry of

Defence to meet the strategic electronics needs of Indian defence services. BHE manufactures

defence products in various segments, such as defence communications, electronic warfare

systems, avionics, electro optics, radio detection and weapon systems. It also has a non-

defence business (civilian radars, egovernance systems, telecom broadcast systems, solar

products and electronic voting machines). BHE is experienced in executing large system-

integration projects and has an in-house R&D division.

Valuation Method and Risk Statement

We believe sector risks that could affect India’s infrastructure and industrial companies

include: 1) a slower-than-expected recovery in overall GDP growth, leading to sluggish capex

and, in turn, a weak recovery in India's investment cycle; 2) delays in asset monetisation

leading to government spending cuts on urban infrastructure; 3) a slower ramp-up in high-

growth urban infrastructure segments, such as transportation/renewable energy; and 4) a

sharp increase in crude oil prices, which could reduce the government's flexibility to step up

public investment.

BHE: We value the stock on a PE multiple basis. Key downside risks to our investment view are

significant decreases in defence budget spending (more importantly, towards defence

electronics/weapon platforms) and a significant reduction in the share of nominated

contracts (assured business for BEL without competition).