Bharat Electronics: Strong Q1 Fails To Revive Sentiment, SEBI RAs Flag Bearish Technical Signals

State-run Bharat Electronics (BEL) reported a 22.6% increase in net profit of ₹970 crore in Q1 FY26, with revenue from operations climbing 5% to ₹4,439.7 crore. However, profit and revenue saw sharp sequential declines of over 54% and 51%, respectively.

Despite the positive earnings, BEL shares were down 1.55% at ₹384.95.

Technical charts show weakness

On the technical charts, BEL’s price action is flashing early warning signs, said SEBI-registered analyst Rajneesh Sharma.

A bearish divergence in the weekly relative strength index (RSI), where momentum weakens as price climbs, signals exhaustion. The monthly RSI is also cooling off near previous highs, indicating fading strength.

The stock faced a sharp rejection at ₹436 and closed near ₹389 on Monday, forming an exhaustion candle in a known supply zone.

BEL shares have broken below a steep weekly trendline, making ₹364 a critical short-term support. A breach below this may open the door to ₹318 or even ₹254 in the long term, he added. Volume remains underwhelming near recent highs.

However, a decisive breakout above ₹430, accompanied by increased volume or a significant defense order, could negate the bearish setup.

Analyst Varun Kumar Patel said that the stock is moving sideways within a well-defined range of ₹385 to ₹417.

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The shares are trading slightly below their 20- and 50-day exponential moving averages (EMA), while the RSI is near 39, which supports the bearish momentum.

Patel identified key support between ₹380 - ₹385, while a breakout above ₹415, with volume confirmation, could trigger upward momentum.

Meanwhile, research firm Financial Independence struck a bullish tone, highlighting a strong Q1 marked by improved margins, robust order inflows, efficient execution, and a well-diversified order book.

Fundamental outlook

Q1 tends to be seasonally weak for defense PSUs, including BEL. Delays in finalizing large defense orders could impact future revenue visibility, according to Patel.

Key risks include valuations that are stretched at nearly 50 times the trailing price-to-earnings ratio, reflecting high expectations. Additionally, cost pressures from volatile import component prices could impact margins.

However, the company remains focused on execution-led growth across defense verticals, with a strong order pipeline. It reassured investors of minimal impact from geopolitical risks, such as the Israel-Iran conflict, citing its low exposure, Sharma said.

Despite short-term headwinds, BEL posted a stable Q1 FY26 performance with margin discipline and solid YoY profit growth.

Backed by a robust order book, favorable defense policies, and operational resilience, BEL continues to be a strategically and fundamentally key player in India’s defense space.

Looking ahead, the company aims to deepen its self-reliance, scale exports, and invest in next-generation technologies, including radar, AI-integrated systems, and cyber solutions, all while maintaining stable margins and a robust backlog, Sharma added.

Year-to-date (YTD), the Navratna PSU gained 31%.

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