UBS Gives Bharat Electronics Its Highest-Ever Target Price, Now Favored Over HAL

In a significant endorsement of India's growing defense manufacturing capabilities, global investment firm UBS has issued its highest-ever target price for Bharat Electronics Ltd (BEL), positioning the PSU giant as its top defense sector pick over Hindustan Aeronautics Ltd (HAL). The move has sent positive signals through the market, reinforcing investor confidence in BEL’s long-term growth prospects.

UBS raised BEL’s target price to ₹275 per share, citing robust order inflows, improved execution, and expanding opportunities under India’s “Atmanirbhar Bharat” (self-reliant India) initiative. The brokerage highlighted BEL’s leadership in defense electronics, diversification into non-defense segments, and a healthy order book as key factors driving the bullish outlook.

“In an increasingly uncertain geopolitical environment, Bharat Electronics stands out as a critical enabler of India’s defense preparedness. Its portfolio spans radar systems, communication networks, electronic warfare, and cybersecurity — all essential to India’s military modernization,” UBS analysts stated in their latest research note.

The note also mentioned that BEL's steady margins, return ratios, and debt-free balance sheet make it a safer and more attractive bet compared to HAL, which, although also a strong player, is more exposed to cyclical risks and higher execution challenges in the aircraft manufacturing domain.

The re-rating comes at a time when BEL has reported a 19% YoY jump in net profit in the fourth quarter of FY25, driven by higher revenue from operations and new orders from the Indian armed forces. The company has also ventured into areas such as AI-driven surveillance systems, space electronics, and smart city technologies — moves that have impressed analysts tracking the Indian defense and aerospace sector.

Market reaction was swift. BEL shares rallied over 4% in early trading on Thursday, outperforming both the benchmark Nifty 50 and the broader PSU index. In contrast, HAL shares remained flat, reflecting the shifting sentiment among institutional investors.

“We see BEL as a long-term compounder in the Indian defense space,” UBS added. “It is better placed to benefit from upcoming defense capital expenditure, government policies promoting indigenization, and increased exports.”

Industry experts agree that UBS’s backing could further boost BEL’s credibility among foreign institutional investors. “This is a clear signal that global analysts are recognizing BEL’s evolution from a traditional PSU to a modern, innovation-driven enterprise,” said Siddharth Sharma, a defense sector analyst with Mumbai-based Alpha Research.

With India expected to increase its defense spending over the next five years — especially in indigenous electronics and strategic systems — companies like BEL are likely to be at the forefront. The current order book stands at over ₹65,000 crore, with more in the pipeline from both domestic and international clients.

As defense remains a critical pillar of India’s industrial policy, UBS’s high conviction on BEL could mark a turning point in how global investors perceive Indian PSUs — not just as government-run utilities, but as engines of technological and strategic growth.