Shares of the defence company and a recent Nifty 50 entrant, (BEL), have seen a massive rally in their shares so far in 2025, making it one of the best-performing index stocks. However, this has pushed valuations past the comfortable zone.
BEL share price is holding above the ₹400 level amid a 37% rally year-to-date (YTD), which has also pushed its market capitalisation closer to ₹2.95 lakh crore.
Trading at a price-to-earnings ratio of 53.60 times, is still undervalued compared to the industry average of 72.46 times, but is significantly higher than the historical average.
have had a stellar year as the India-Pakistan conflict, order wins, and strong pipeline have made them lucrative for investors. However, this has pushed the valuations past the comfort zone.
BEL’s order book as of the June quarter stood at ₹74860 crore, with inflows rising 48% ( ₹7,300 crore) during the three months. Order inflows for FY26 are likely to be ₹27000 crore, excluding the QRSAM order, worth ₹30000 crore, which is expected to be booked in 4QFY26 itself.
“BEL continues to be a high-quality, long-term compounder, backed by a robust order book of INR 74,859 crore (3X of TTM revenue) and strong government defence prospects. Along with its various global partnerships for the modernisation of Indian defence equipment, the company has also entered into a JV with L&T to support the Indian Air Force’s Advanced Medium Combat Aircraft (AMCA) programme,” said Vinit Bolinjakr, Head of Research at Ventura Securities.
With BEL majorly into defence electronics and less exposed to competition from commodity producers, Vaqarjaved Khan, CFA, Sr. Fundamental Analyst, Angel One, expects the company’s margin and return profile to remain stellar.
The company management guided for revenue growth of 15%-17.5%, with EBTIDA margins of 27% for FY26. EBITDA margin expanded 580 bps YoY to 28.1% in Q1, driven by gross margin expansion of 780 bps YoY. Gross margins expansion was mainly driven by a better product mix. PAT grew 24.9% YoY to ₹970 crore.
Is BEL a good stock to buy?
However, analysts are concerned about the BEL stock’s valuation despite its stellar order book and margin profile. As a result, they expect some slowdown in the defence stock’s rally in the short term.
“BEL’s valuations are on the higher side, with a FY28 P/E of 33.5X. While the company remains a strong long-term player due to its solid order book and government defence opportunities, the short-term upside could be limited, especially after its sharp run-up and rich valuations,” said Bolinjar.
Khan, too, finds the valuations to be a little stretched as compared to historical averages, leaving modest upside. However, any correction from here can be seen as a good opportunity to accumulate the stock, he advised.
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