Bharat Electronics valuations stretched, HAL top pick in defence: PL Capital

Amit Anwani, Research Analyst at PL Capital Group, saidBharat Electronics(BEL) remains a long-term story, though near-term valuations look stretched after a sharp rally. “We have a hold call on BEL as current valuations look slightly rich to me, though directionally, defence electronics is in for very long-term growth,” he said.

On Mazagon Dock Shipbuilders (MDL), Anwani highlighted the nearly ₹70,000 crore submarine project under P-75I as a major boost. While this will add significantly to the order book, execution will take 8–10 years.

For Hindustan Aeronautics (HAL), he pointed to a sharply expanding order pipeline, rising from ₹30,000 crore four years ago to ₹2.5 lakh crore today, supported by jet engine programmes, the Advanced Medium Combat Aircraft (AMCA), and Light Combat Aircraft (LCA) Mk2. Anwani called HAL his “top pick,” citing attractive valuations at about 32x and scope for sustainable double-digit growth.

He added that defence electronics will be a key driver, with projects such as the Sudarshan Chakra multi-layer defence system requiring advanced avionics, surveillance, and cybersecurity. Shipbuilding companies, he stated, trade around 30x earnings, while defence electronics players command closer to 40x, highlighting the valuation gap across sub-segments.

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Going forward, Anwani expects defence capex to stay strong despite some investor rotation toward consumption themes. He pointed out that the government is targeting a doubling of annual defence turnover to ₹3 lakh crore over the next six years, backed by localisation of critical technologies like indigenous jet engines. “Structurally, there is a lot of opportunity with robust pipelines and policy support,” he said, adding that while sentiment may shift in the short term, the long-term defence growth story remains intact.

For the entire interview, watch the accompanying video

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