BEL, HAL, BDL, GRSE: Q3 preview, target prices; Budget 2026 & other triggers
In its December quarter preview note on the capital goods and defence sector, Elara Securities said BEML Ltd and Hindustan Aeronautics Ltd (HAL) were expected to lead profit growth within its coverage universe. Elara said the defence sector continued to remain in a sweet spot, noting that the Defence Acquisition Council had accorded approvals worth Rs 3.3 lakh crore so far in FY26, up 94 per cent year on year. The brokerage added that the Ministry of Defence had achieved 80 per cent, or Rs 1.2 lakh crore, of its defence capital expenditure year to date until December 2025.
Ahead of the December quarter earnings and the Union Budget 2026, Elara suggested an ‘Accumulate’ rating on Bharat Electronics Ltd (BEL) and Bharat Dynamics Ltd (BDL), a ‘Buy’ rating on HAL, BEML and Zen Technologies Ltd, and a ‘Sell’ rating on Garden Reach Shipbuilders and Engineers.
It set target prices of Rs 470 for Bharat Electronics, Rs 5,680 for Hindustan Aeronautics, Rs 1,625 for Bharat Dynamics, Rs 2,200 for Garden Reach Shipbuilders and Engineers, Rs 2,700 for BEML and Rs 2,120 for Zen Technologies.
Elara said key monitorables would include the Budget 2026 and updates on large-ticket defence orders such as the QRSAM programme worth Rs 40,000 crore, the next-generation corvette project valued at Rs 36,000 crore, the P75I submarine project of Rs 70,000 crore, and the Pinaka guided missile programme estimated at Rs 5,000 crore to Rs 10,000 crore.
In the case of Q3 results, Elara on HAL said "We expect revenue growth of 6 per cent YoY, driven by healthy execution in repair & overhaul (RoH), followed by manufacturing revenue while margin is likely to surprise on the positive, spiking 140bp YoY to 25.6 per cent (vs margin dilution in Q2FY26), dragged by higher contribution from manufacturing and provisions doubling YoY in Q2."
On BEML, it said revenue is set to grow 6 per cent YoY, led by healthy execution in defence along with rail & metro (R&M) while mining is likely to pick up in Q4FY26. Margin is likely to expand 150 bps YoY, driven by revenue mix and operating leverage, Elara said.
Elara estimated BEL Q3 net profit at Rs 1,341.30 crore, up 3.1 per cent. It sees sales rising 10 per cent YoY to Rs 6,347.80 crore. HAL's profit is seen rising 29.1 per cent to Rs 1,858.50 crore. Sales are seen at Rs 7,379.50 crore. BDL Q3 profit is seen falling 24.1 per cent YoY to Rs 213.70 crore on 15.9 per cent YoY rise in sales at Rs 964.10 crore. GRSE's profit is seen rising 64.70 per cent YoY to Rs 161.70 crore on 32 per cent YoY jump in sales at Rs 1,677.70 crore. Meanwhile, Zen Technologies is seen reporting 7.8 per cent YoY rise in profit at Rs 46 crore on 5 per cent drop in sales at Rs 144.60 crore.
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