Complete Financial Model of BEL
A ground-up exploration of BEL’s business model, revenue drivers, profitability levers, and risk profile
What’s the Intrinsic Value of Bharat Electronics or BEL? A DCF Analysis
In this post, I guide you through a detailed Discounted Cash Flow (DCF) valuation of Bharat Electronics (BEL), which a key player in India’s defense electronics sector. My goal is to estimate BEL’s fair value based on its fundamentals, drawing on its financials, earnings calls, and annual reports. By the end, I’ll show you why I calculate BEL’s intrinsic equity value at ~Rs. 47,137 Crore, or Rs. 64.5 per share.
Here’s a snapshot of what to expect:
Intrinsic Value: I calculate BEL’s intrinsic value at Rs 64.5 per share, based on a DCF model projecting Free Cash Flows to the Firm (FCFF) from FY26–FY35, discounted at an 18% Weighted Average Cost of Capital (WACC). This accounts for BEL’s robust financials, including Rs 23,768 Crores in FY25 revenue and a Rs 71,650 Crore order book.
Growth Drivers: Expect insights into BEL’s revenue growth (15% in FY26, tapering to 8% by FY35), fueled by major defense projects like QRSAM and Project Kusha, alongside diversification into non-defense (targeting 30% of turnover) and exports (USD 106M in FY25).
Profitability & Efficiency: I explore BEL’s strong margins (29.9% EBIT in FY25, tapering to 22%) and cost control, underpinned by 77% indigenous products and 6.24% R&D investment.
Strategic Edge: Learn how BEL’s government backing, dominant market position, and “combat-tested” products create a competitive moat, balanced against risks like defense budget reliance.
Investment Insights: I analyze why BEL’s market price (Rs 390) far exceeds our intrinsic value, exploring market optimism, strategic premiums, and what this means for your portfolio.
So with that, let’s begin.
Part 1: Understanding BEL's Business Landscape
First off, download the financial model below, so you can track the numbers as we go along: