Best Defense and Manufacturing Sector Stocks – BHEL vs BEL

Company Overview of Bharat Heavy Electricals Ltd

Bharat Heavy Electricals Ltd (BHEL) is a leading public sector company in India’s defence and manufacturing sector, established in 1964. Specializing in power generation equipment, BHEL also contributes significantly to the defence sector by manufacturing key components like boilers, turbines and electrical systems. It supports India’s strategic needs with expertise in defence-grade equipment, including propulsion systems and missile components. 

As a Maharatna company, BHEL operates across diverse sectors such as energy, transportation and heavy industries. Its robust R&D and engineering capabilities make it a critical player in India’s infrastructure and defence modernization, with a strong focus on innovation and sustainability. 

Company Overview of Bharat Electronics Ltd

Bharat Electronics Ltd (BEL) is a premier public sector enterprise in India’s defence and manufacturing sector, established in 1954 under the Ministry of Defence. It specializes in designing and manufacturing cutting-edge electronic equipment for defence and civilian applications. 

BEL’s diverse product portfolio includes radar systems, communication devices, missile systems and electronic warfare equipment, playing a crucial role in strengthening India’s defence capabilities. The company is also expanding into emerging areas like space electronics, artificial intelligence and homeland security. With its robust R&D and strategic partnerships, BEL is a key contributor to India’s self-reliance in defence manufacturing and technological innovation. 

The Stock performance of BHEL

The table below displays the month-by-month stock performance of Bharat Heavy Electricals Ltd for the past year.

The Stock performance of BEL

The table below displays the month-by-month stock performance of Bharat Electronics Ltd for the past year.

Fundamental Analysis of Bharat Heavy Electricals Ltd

Bharat Heavy Electricals Ltd (BHEL) is a prominent Indian public sector enterprise engaged in manufacturing, engineering and power equipment. Established in 1964, the company plays a vital role in India’s energy sector, providing innovative technology solutions for power generation, transmission and distribution. BHEL has built a strong reputation for delivering high-quality products and services across various sectors, including thermal, hydro and renewable energy.   

The stock, priced at ₹230.06, has a market capitalization of ₹80,108.35 crore and a book value of ₹24,438.65. It delivered a strong 1-year return of 18.34% despite a 6-month decline of -26.10%. The 5-year CAGR stands at 38.84%, although the 5-year average net profit margin is -3.19%, reflecting financial challenges. The stock is 45.77% below its 52-week high. 

• Close Price ( ₹ ): 230.06
• Market Cap ( Cr ): 80108.35
• Dividend Yield %: 0.11
• Book Value (₹): 24438.65
• 1Y Return %: 18.34
• 6M Return %: -26.10
• 1M Return %: -7.16
• 5Y CAGR %: 38.84
• % Away From 52W High: 45.77
• 5Y Avg Net Profit Margin %: -3.19 

Fundamental Analysis of Bharat Electronics Ltd

Bharat Electronics Ltd (BEL) is a leading public sector enterprise in India, established in 1954 under the Ministry of Defence. It specializes in designing and manufacturing advanced electronic equipment for defence and civilian applications. BEL’s product portfolio includes radars, missile systems, communication devices and electronic warfare systems, making it a critical player in strengthening India’s defence capabilities. The company is also diversifying into emerging areas like space technology, artificial intelligence and renewable energy solutions. 

The stock, priced at ₹291.95, boasts a market capitalization of ₹2,13,408.99 crore and a book value of ₹16,344.39. It delivered an impressive 1-year return of 60.10% and a strong 5-year CAGR of 54.05%, supported by a healthy 5-year average net profit margin of 15.94%. The stock is 16.63% below its 52-week high. 

• Close Price ( ₹ ): 291.95
• Market Cap ( Cr ): 213408.99
• Dividend Yield %: 0.75
• Book Value (₹): 16344.39
• 1Y Return %: 60.10
• 6M Return %: -7.17
• 1M Return %: -3.76
• 5Y CAGR %: 54.05
• % Away From 52W High: 16.63
• 5Y Avg Net Profit Margin %: 15.94 

Financial Comparison of BHEL and BEL

The table below shows a financial comparison of Bharat Heavy Electricals Ltd and Bharat Electronics Ltd.

Points to be noted:

• EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization): Measures a company’s profitability before accounting for financial and non-cash expenses.
• PBIT (Profit Before Interest and Tax): Reflects operating profit by excluding interest and taxes from total revenue.
• PBT (Profit Before Tax): Indicates profit after deducting operating costs and interest but before taxes.
• Net Income: Represents the company’s total profit after all expenses, including taxes and interest, are deducted.
• EPS (Earnings Per Share): Shows the portion of a company’s profit allocated to each outstanding share of stock.
• DPS (Dividend Per Share): Reflects the total dividend paid out per share over a specific period.
• Payout Ratio: Measures the proportion of earnings distributed as dividends to shareholders.

Dividend of BHEL and BEL

The table below shows a dividend paid by the company.

Advantages and Disadvantages of Investing BHEL

Bharat Heavy Electricals Ltd

The primary advantage of Bharat Heavy Electricals Ltd (BHEL) is its leadership in the power equipment manufacturing sector, offering a broad portfolio of products and services catering to thermal, nuclear and renewable energy segments across India and beyond.

1. Comprehensive Product Portfolio: BHEL manufactures a wide range of power equipment, including boilers, turbines and generators. This extensive offering ensures its dominance in the energy sector and addresses diverse infrastructure needs.
2. Expertise in Renewable Energy: BHEL is expanding its footprint in solar and wind energy projects, aligning with India’s focus on clean energy transitions and contributing significantly to the renewable energy sector’s growth.
3. Strong Government Backing: As a public sector enterprise, BHEL benefits from government support in securing large-scale infrastructure and energy contracts, ensuring consistent project pipelines and steady revenue generation.
4. Focus on R&D and Innovation: BHEL invests heavily in research and development to enhance the efficiency and reliability of its products. This innovation supports the company’s competitive edge in a technologically evolving industry.
5. Global Presence: BHEL exports its products and services to over 80 countries, leveraging its engineering expertise to cater to international markets. This global outreach diversifies revenue streams and enhances market competitiveness.

The main disadvantage of Bharat Heavy Electricals Ltd (BHEL) is its dependency on the power sector, which makes its revenue highly vulnerable to fluctuations in infrastructure investments and challenges in project execution timelines.

1. Sector Concentration: BHEL heavily relies on the power and energy sectors for revenue. Any slowdown in infrastructure development or energy projects significantly impacts its financial performance and growth opportunities.
2. High Competition: The company faces intense competition from private and international players, which often deliver projects faster and more cost-effectively, challenging BHEL’s market share and margins.
3. Operational Inefficiencies: Legacy systems and delays in project execution impact BHEL’s operational efficiency. These inefficiencies can result in cost overruns, affecting profitability and customer confidence.
4. Limited Diversification: Despite some forays into renewable energy and defence, BHEL remains less diversified compared to peers, making it more vulnerable to sector-specific downturns.
5. High Capital Intensity: BHEL’s business model involves large-scale capital investments in manufacturing and infrastructure. This capital-intensive nature makes it susceptible to financial strain during periods of low demand or delayed payments. 

Advantages and Disadvantages of Investing in BEL

Bharat Electronics Ltd

The primary advantage of Bharat Electronics Ltd (BEL) lies in its leadership in defence electronics, offering a diverse portfolio of advanced equipment and systems that play a critical role in bolstering India’s self-reliance in defence manufacturing.

1. Diverse Product Portfolio: BEL designs and manufactures a wide range of products, including radars, missile systems, communication devices and electronic warfare equipment, catering to the varied needs of defence and civilian sectors.
2. Strong R&D Capabilities: The company invests significantly in research and development, enabling it to innovate cutting-edge technologies and maintain a competitive edge in the fast-evolving defence electronics market.
3. Government Contracts: BEL benefits from consistent government contracts, ensuring steady revenue streams. Its strategic importance in India’s defence ecosystem strengthens its position as a trusted partner for the armed forces.
4. Export Opportunities: BEL exports its products to several countries, leveraging its expertise in defence electronics to expand its global footprint and diversify revenue sources beyond the domestic market.
5. Focus on Emerging Technologies: BEL is actively investing in areas like space technology, artificial intelligence and homeland security, aligning with global trends and ensuring sustained growth in new-age defence and security solutions. 

The main disadvantage of Bharat Electronics Ltd (BEL) is its heavy reliance on government defence contracts, which makes its revenue susceptible to budgetary changes, delays in procurement decisions and geopolitical factors.

1. Dependence on Government Contracts: BEL’s revenue is predominantly driven by government defence orders. Any delays or changes in defence budgets can significantly impact the company’s financial stability and growth prospects.
2. Limited Diversification: Despite its expanding portfolio, BEL remains primarily focused on defence electronics. This lack of diversification makes it vulnerable to downturns in the defence sector or shifts in procurement policies.
3. Competition from Private Players: The defence sector is witnessing increasing participation from private companies, leading to heightened competition. This could challenge BEL’s market share and pricing power.
4. Export Challenges: While BEL exports to various countries, it faces stiff competition from global defence manufacturers. Regulatory and geopolitical issues further limit its ability to expand rapidly in international markets.
5. Capital-Intensive Operations: Developing and manufacturing advanced defence technologies require significant capital investments. High operational costs can strain profitability, particularly if there are delays in payments or project completions. 

How to Invest in BEL and BHEL Stocks?

Investing in BEL and BHEL stocks requires understanding their financial performance, industry prospects and strategic importance in India’s defence and manufacturing sectors. Utilizing a reliable broker like Alice Blue simplifies the investment process.

1. Open a Demat Account: Begin by opening a Demat and trading account with Alice Blue, a trusted broker offering advanced tools, low brokerage fees and seamless access to both BEL and BHEL stocks.
2. Analyze Financials and Growth Potential: Research the financial health, profit margins and market position of both companies. Assess their growth prospects in sectors like defence electronics (BEL) and energy infrastructure (BHEL).
3. Monitor Market Trends: Track the stock performance of BEL and BHEL, considering industry trends and government policies. Staying informed helps you make better decisions on when to buy or sell.
4. Diversify Investments: Avoid over-reliance on one stock or sector. Diversify your portfolio by investing in other promising industries along with BEL and BHEL, balancing risk and maximizing potential returns.
5. Use Broker Insights: Leverage Alice Blue’s research reports, expert guidance and advanced analytics. These tools help you evaluate market conditions and make informed investment choices tailored to your financial goals. 

BHEL vs. BEL – Conclusion

BHEL is a leading player in the power equipment sector, driving India’s energy and infrastructure development. While it faces challenges in profitability and operational efficiency, its focus on renewable energy and global outreach offers long-term growth opportunities in the evolving energy landscape.

BEL excels in defence electronics, leveraging its strong R&D capabilities and government support to maintain a leadership position. With consistent profitability, export growth and diversification into emerging technologies, BEL is well-positioned to capitalize on India’s push for self-reliance in defence and advanced technologies.

Best Defense and Manufacturing Sector Stocks – BHEL vs. BEL – FAQ

What is BHEL?

BHEL, or Bharat Heavy Electricals Limited, is an Indian engineering and manufacturing company specializing in the production of heavy electrical equipment. Established in 1964, it plays a vital role in various sectors, including power generation, transmission and industrial applications and is a pivotal player in India’s energy sector.

What is BEL?

BEL stands for Bharat Electronics Limited, a leading public sector company in India specializing in advanced electronics and defence systems. Founded in 1954, it aims to promote Indigenous technology for defence and other sectors, offering a range of products and solutions for both domestic and international markets.

What are Defense and Manufacturing Stocks?

Defence and manufacturing stocks represent companies involved in producing equipment, technology and services for defence and industrial applications. These include arms, ammunition, aerospace systems, heavy machinery and power equipment. Such stocks benefit from government contracts, infrastructure development and increased defence spending, offering growth opportunities tied to national security and industrial expansion. 

Who is the CEO of Bharat Heavy Electricals Ltd?

As of November 1, 2023, Koppu Sadashiv Murthy serves as the Chairman and Managing Director (CMD) of Bharat Heavy Electricals Ltd (BHEL), India’s largest government-owned electrical and industrial technology company. With over 34 years of experience within BHEL, Murthy has held various leadership roles, including Executive Director of the Corporate Operations Management group. He succeeded Dr. Nalin Shinghal, who served as CMD from July 2019 to October 2023.  

What are the main competitors Of BHEL and BEL?

The main competitors for BHEL include Larsen & Toubro (L&T), GE Power and Siemens India, focusing on power equipment and heavy engineering. For BEL, key competitors are Hindustan Aeronautics Limited (HAL), Data Patterns and Reliance Defence, specializing in defence electronics and aerospace systems.

What Is The Net Worth Of BEL Vs BHEL?

Bharat Electronics Ltd (BEL) has a market capitalization of approximately ₹2.13 trillion, reflecting its leadership in defence electronics. In comparison, Bharat Heavy Electricals Ltd (BHEL) has a market capitalization of around ₹843 billion, indicating BEL’s significantly larger market presence and financial valuation compared to BHEL. 

What Are The Key Growth Areas For BHEL?

Bharat Electronics Ltd (BEL) focuses on growth areas like defence electronics, including radars, missile systems and electronic warfare. It is also expanding into space technology, artificial intelligence and homeland security while leveraging opportunities in smart city solutions, renewable energy systems and government initiatives for self-reliance in defence manufacturing.

What Are The Key Growth Areas For Bharat Electronics Ltd?

BEL offers better dividends compared to BHEL, with a higher dividend yield of approximately 0.75% and consistent payouts reflecting its stable profitability. In contrast, BHEL has a lower dividend yield of 0.11%, making BEL more attractive for dividend-focused investors. 

Which Company Offers Better Dividends, BHEL Or BEL?

Bharat Electronics Limited (BEL) generally offers better dividends compared to Bharat Heavy Electricals Limited (BHEL), reflecting its strong profitability and consistent financial performance. BEL’s focus on the defence and electronics sector provides steady cash flows, enabling higher dividend payouts and making it more attractive for dividend-seeking investors.

Which Stock Is Better For Long-term Investors, BHEL Or BEL?

For long-term investors, BEL is a better option due to its consistent profitability, strong foothold in the defence sector and growth potential in advanced technologies. While BHEL offers opportunities in renewable energy and infrastructure, its cyclical nature and lower profitability make BEL a more stable and attractive investment.

Which Sectors Contribute Most To BHEL And BEL’s Revenue?

BHEL earns most of its revenue from the power sector, including thermal, nuclear and renewable energy equipment and contributions from heavy engineering and industrial services. BEL generates revenue primarily from the defence sector, including radar, communication and surveillance systems, with additional contributions from civilian electronics and smart city solutions.

Which Stocks Are More Profitable, BHEL Or BEL?

Bharat Electronics Ltd (BEL) has consistently demonstrated higher profitability compared to Bharat Heavy Electricals Ltd (BHEL). BEL’s net profit margin stands at approximately 15.94%, reflecting efficient operations and strong market demand. In contrast, BHEL has faced profitability challenges, with a 5-year average net profit margin of around -3.19%.

Disclaimer: The above article is written for educational purposes and the companies’ data mentioned in the article may change with respect to time The securities quoted are exemplary and are not recommendatory.