Why Bharat Electronics Share Price is Rising

India's defence sector is witnessing transformative growth, driven by government initiatives aimed at bolstering self-reliance and modernising military capabilities.

With increased budgets, policy support, and a strong focus on indigenisation, the sector has expanded swiftly, attracting significant investor interest and sparking a rally in defence stocks.

However, this momentum recently slowed as concerns over high valuations and profit-booking led to a temporary pullback in share prices.

Now again, the winds have shifted as Bharat Electronics (BEL) - one of the key players in India's defence industry - sees its stock rising, along with other major defence companies like Hindustan Aeronautics (HAL) and Mazagon Dock Shipbuilders.

BEL share price is under investor focus as it rallied 5.4% in the past five days. It is a state-owned defence electronics company. It plays an essential role in equipping the Indian armed forces with a range of advanced technologies.

From radars and communication systems to electronic warfare solutions, BEL's products are vital to India's military readiness and defence infrastructure.

With its pivotal role in India's defence landscape and the sector's renewed momentum, let's dive into the factors driving Bharat Electronics share price upward.

#1 Optimistic Outlook

India's push towards self-reliance in defence, or Aatmanirbhar Bharat, is seeing notable success, as highlighted by Defence Minister Rajnath Singh.

On Saturday last week he projected at a conference that India's defence exports could reach Rs 500 billion (bn) by 2029-30, up from just Rs 210 bn in 2023-24.

This surge reflects the government's dedicated efforts to increase indigenous production and reduce dependence on imports for high-tech defence equipment.

Speaking at an event at IIT Kanpur, Singh encouraged young innovators to develop advanced defence technologies domestically, crucial for national security and for reducing India's reliance on imported systems.

The Indian government has introduced initiatives like iDEX (Innovations for Defence Excellence) to encourage start-ups and research institutions in defence technology development.

Through grants and collaborations, these efforts aim to promote innovation across sectors such as drone technology, AI-driven surveillance, and autonomous defence systems.

Singh also highlighted the importance of academia in driving defence advancements and supporting India's vision of becoming a developed nation by 2047.

For BEL, this push towards self-reliance opens significant opportunities, given its role as a major supplier of advanced defence electronics and technology to the Indian military.

BEL is well-positioned to benefit from increased government funding and focus on domestic manufacturing, which fuels demand for its products and boosts investor confidence.

Following these announcements, BEL share price is rising reflecting market optimism over the company's long-term growth potential in line with India's defence ambitions.

#2 Strong Quarterly Results

In the September quarter, BEL recorded a net profit of Rs 10.9 billion (bn), marking a 34.4% increase from the same quarter last year. This result exceeded market expectations reflecting strong demand and efficient cost management.

BEL's quarterly revenue also grew by 15% year-over-year (YoY) to reach Rs 45.8 bn. This revenue growth was largely driven by heightened defence sector activity, which led to higher production and delivery volumes.

The company's earnings before interest, tax, depreciation, and amortisation (EBITDA) surged to Rs 13.9 bn, a rise of 38.3% compared to the previous year. This increase in EBITDA reflects BEL's effective cost control and higher production efficiencies.

Additionally, BEL's EBITDA margin expanded by over 500 basis points to reach 30.3%, compared to 23.8% last year. This margin improvement underscores BEL's operational efficiency and cost-effective manufacturing, particularly amid rising defence sector investments.

BEL's robust order book, valued at Rs 74.6 bn by the end of the quarter, highlights sustained demand in the defence industry, providing a positive outlook for future revenue streams.

Strong quarterly results, BEL strategic position within India's growing defence sector and strong financials continue to attract investor confidence, supporting a rise in its share price.

How Bharat Electronics Share Price Has Performed Recently

In the past five days, Bharat Electronics share price has rallied 5.4%. In 2024 so far, it is up 62.2%.

The stock surged 31.9% in the past six months. Additionally, it has rallied 117.3% in the last year.

The stock touched its 52-week high of Rs 340.4 on 10 July 2024 and a 52-week low of Rs 137 on 10 November 2023.

About Bharat Electronics

Bharat Electronics is a Navratna defence PSU. The company is the dominant supplier of radar, communication, and electronic warfare equipment to the Indian armed forces.

It has a diversified product line, including non-defence products, software, and electronic manufacturing services.

It also exports its products to several countries, including Botswana, Indonesia, Sri Lanka, Russia, the US, and South Africa.

To know more about the company, check out Bharat Electronics fact sheet and quarterly results.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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