BEL shares get their highest price target from Jefferies, Macquarie after Q1 results

State-run defence equipment manufacturer Bharat Electronics Ltd. (BEL)

will be reacting to its June quarter results on Tuesday, July 28, after it received its highest share price target from brokerages Jefferies and Macquarie. 88% out of the 33 analysts who cover the stock have a "buy" recommendation on it.

Both Jefferies and Macquarie have a price target of ₹550 on BEL, which implies an upside potential of 36% from current levels.

Jefferies wrote in its note that BEL's Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter were in-line with their expectations, while the order flow guidance was also maintained at ₹55,000 crore for the full year.

The brokerage has also maintained its projections of BEL's earnings growing at a Compounded Annual Growth Rate (CAGR) of 15% after the management maintained its revenue growth guidance for the full year.

Goldman Sachs also has a "buy" rating on BEL with a price target of ₹470.

It said that the management expressed confidence of achieving its full year order inflow guidance of over ₹55,000 crore despite a lean first quarter.

BEL attributed the weak order inflow in the June quarter to timing differences, including order advancement into the fourth quarter and procedural delays in select programs.

CLSA has an "outperform" rating on BEL with a price target of ₹522. It stated that the order inflow was weak during the quarter as the government was busy with the West Asia conflict, and the best for the stock is yet to come.

Winning the joint bid to support the building of India's 5th generation fighter aircraft worth $12 billion with L&T and the Indian S400 systems are important for BEL to sustain a re-rating, CLSA wrote in its note.

Nomura though, is the only brokerage with a "neutral" rating on BEL, with a price target of ₹454.

It said that emerging opportunities and indigenization are key focus areas for the company.

For the June quarter, BEL's revenue grew by 25% from last year but was down 46% sequentially to ₹5,533 crore.

Its Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter grew by 12% from last year to ₹1,389 crore, but was down 53% from the March quarter.

EBITDA margin for the quarter narrowed both sequentially as well as on a year-on-year basis to 25.11%.

Out of the 33 analysts who cover BEL, 29 of them have a "buy" rating on the stock, one says "hold", and three others have a "sell" rating on the stock. The consensus estimates of price target implies an upside potential of 20% from current levels.