🧠 At a Glance
Bharat Electronics Ltd (BEL), India’s favorite defence PSU, just posted a record ₹5,323 Cr profit in FY25. With an order book heavier than a DRDO missile and ROCE nearing 40%, retail investors are saluting the scrip. But at 56x P/E, are we already paying for World War 3?
🧨 1. What Makes BEL Explosive?
- 🎯 Defence Dominance: 81% of FY24 revenue from defence, down from 90% in FY22 — means mild civilian diversification too.
- 🛡️ High-Margin Moat: OPM of 29% in FY25. Not a typo.
- 🚫 Zero Borrowings: Leverage? BEL says “what’s that?”
- 🚀 Order Inflow Party: ₹3,400 Cr+ of fresh orders in June 2025 alone.
- 💾 New SBUs: Arms, Cyber, Unmanned Systems — they’re going full Terminator meets Make in India.
📈 2. Financial Highlights (BEL-issimo performance)
| Metric | FY21 | FY25 | % Change |
|---|---|---|---|
| Revenue | ₹14,109 Cr | ₹23,769 Cr | 🔼 68% |
| Net Profit | ₹2,100 Cr | ₹5,323 Cr | 🔼 153% |
| OPM | 23% | 29% | 🔼 +600 bps |
| ROE | 24% | 29% | 🟢 Strong |
| EPS | ₹2.87 | ₹7.28 | 🔼 154% |
💡 5Y Profit CAGR: 24%
💡 Stock Price CAGR: 70% 😱
⚖️ 3. Fair Value (FV) Range — Is It Still a Bargain?
📊 Valuation Check:
- FY25 EPS: ₹7.28
- Historic P/E Band: 25–35x
- Current P/E: 56x 🧠 (Market’s fully BEL-iever now)
🧮 Fair Value Range = ₹7.28 × (30–36) = ₹218 – ₹262
🎯 CMP = ₹406 ⇒ Highly overvalued on trailing basis
You’re buying next-gen warfare hopes at premium pricing — think of it as pre-paying for missiles India hasn’t even designed yet.
🆚 4. Defence League Table
| Company | P/E | ROE % | OPM % | PAT FY25 (₹ Cr) |
|---|---|---|---|---|
| BEL | 56 | 29.3 | 28.8 | ₹5,323 |
| HAL | 38 | 26.1 | 31.0 | ₹8,359 |
| BDL | 121 | 14.4 | 14.1 | ₹550 |
| GRSE | 65 | 28.1 | 8.3 | ₹527 |
| Zen Tech | 61 | 26.1 | 38.4 | ₹280 |
📢 BEL has the best combo of scale + margin + ROE.
But valuation? Even HAL looks modestly priced in comparison.
📦 5. Balance Sheet: PSU but make it sexy
- 🏦 Reserves: ₹19,243 Cr
- 🏭 Fixed Assets: ₹3,994 Cr
- 🏖️ CWIP Dropped: ₹894 Cr → ₹477 Cr → assets monetizing
- 🏦 Investments up: ₹743 Cr (up from ₹650 Cr)
- 💵 Cash from ops: ₹16,136 Cr in FY25 (massive reinvestment)
But here’s the PSU red flag:
🛑 Working Capital Days rose from 18 → 85 days 😐
Indicative of slower collections or lumpy billing.
🧠 6. EduInvesting Take
BEL is like the Indian Railways of missiles:
✅ Government-funded
✅ Cash-generating
✅ Always loaded with orders
…but also…
❌ Overloved
❌ Overheld (25L+ shareholders!)
❌ Overhyped P/E (55+)
Unless EPS touches ₹10 in FY26 (which requires 35% profit growth from already record base), FV re-rating looks tough.
🎯 Final Verdict:
| Metric | Status |
|---|---|
| Fundamentals | 💪 Rock solid |
| Valuation | 🔴 Stretched |
| ROE/ROCE | 🔥 Top Tier |
| Retail Euphoria | 😵 Extreme |
| Risk-Reward | 🟠 Balanced if long-term |
🎯 FV Range = ₹218 – ₹262
📍CMP: ₹406 ⇒ Trading 50%+ above FV band
Only for long-term defence bulls who don’t mind waiting for war… or a massive EPS beat.
✍️ Written by Prashant | 📅 26 June 2025
Tags: Bharat Electronics, BEL stock, defence PSU, HAL vs BEL, defence multibaggers, fair value BEL, high PE stocks
