On Tuesday, JPMorgan (NYSE:JPM) initiated coverage on Bharat Electronics (NS:BAJE) Ltd (BHE:IN) stock, assigning an Overweight rating and setting a price target of INR340.00. The firm highlighted the company's diverse revenue streams and its positioning to benefit from increasing defense spending in India.
Bharat Electronics, which provides a range of defense equipment and platforms for land, air, and naval forces, is also making strides in emerging sectors such as electronic warfare.
The firm's analysis pointed out that Bharat Electronics is well-placed due to the structural trend of indigenization and potential export opportunities. Additionally, the company's civilian revenue, which accounts for approximately 13-15% of its total revenue, adds a layer of stability to its growth projections.
With high Return on Equity (RoE) exceeding 20%, strong cash flows, and a forecasted Earnings Per Share (EPS) Compound Annual Growth Rate (CAGR) of over 16% in the medium term, Bharat Electronics is expected to continue outperforming its peers.
The Overweight rating reflects the firm's confidence in Bharat Electronics' ability to sustain its growth trajectory amidst strong structural tailwinds. The price target of INR340.00 is based on a 45x Price-to-Earnings (P/E) ratio on the company's expected EPS for June 2026.
In terms of stock performance, Bharat Electronics has seen varied results when compared to the NIFTY50 index, with a decrease of 4% over the past three months, a decline of 76% over the past year, but an impressive increase of 273% over the past three years. JPMorgan's price target suggests a positive outlook for the company's stock in the coming period.
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