Archive · 19 Aug 2026
Jefferies Favors HAL, BEL and Data Patterns Over BHEL
Jefferies, a financial research firm, compared four Indian companies connected to defence and power equipment.
It liked three defence-focused companies more than BHEL.
HAL received the strongest view because it has a very large order book for aircraft and helicopters.
Jefferies expects HAL’s earnings to grow as it completes those orders.
BEL and Data Patterns were also rated Buy because more defence equipment is being made in India.
BHEL received an Underperform rating even though its recent orders increased.
Jefferies is worried that BHEL may struggle with execution, costs and competition.
The ratings are based on Jefferies’ estimates and are not guarantees of future stock performance.
Jefferies rates Hindustan Aeronautics, Bharat Electronics and Data Patterns ‘Buy’, while rating Bharat Heavy Electricals ‘Underperform’.
HAL has the highest projected upside at 34%, followed by Data Patterns at 22% and BEL at 19%.
HAL’s order book equals 7.7 times FY26 revenue, compared with BEL at 2.6 times and Data Patterns at 1 time.
Jefferies expects HAL to deliver 16% EPS CAGR from FY26 to FY30 through execution of its existing order book.
Despite BHEL’s doubled June-quarter order flow, Jefferies cited execution concerns, margin pressure, fixed costs and aggressive pricing risks.
- Who
- Jefferies and the four companies it reviewed: Bharat Heavy Electricals, Bharat Electronics, Data Patterns and Hindustan Aeronautics.
- What
- Jefferies issued different stock ratings, favoring HAL, BEL and Data Patterns while rating BHEL Underperform.
- When
- The article discusses Jefferies’ estimates for FY26-FY30 and recent June-quarter results.
- Where
- India’s aerospace, defence and power-equipment sectors.
- Why
- Jefferies emphasized order-book visibility, execution, domestic procurement, indigenisation and the ability to convert demand into earnings.
Positive Investment Case
Risks and Cautions
Defence demand and indigenisation
Positive Investment Case
HAL, BEL and Data Patterns could benefit from rising domestic defence procurement, indigenisation and, in some cases, export opportunities.
Risks and Cautions
The benefits depend on the pace of ordering, tender activity, export visibility and successful execution of contracts.
Order-book visibility
Positive Investment Case
HAL’s 7.7-times FY26 revenue order book, BEL’s 2.6-times coverage and Data Patterns’ 1-times coverage provide differing levels of revenue visibility.
Risks and Cautions
Order books do not remove company-specific risks: HAL faces manufacturing delays, BEL has QRSAM-related delays and Data Patterns faces possible execution and technology risks.
BHEL’s improved orders
Positive Investment Case
BHEL’s June-quarter order flow doubled year over year, led by increased power-segment orders.
Risks and Cautions
Jefferies remains concerned about execution, competitive pricing, fixed costs, margin pressure and the possible effect of renewable power on captive-power demand.
- HAL rating
- Buy; target price of Rs 6,800, implying 34% upside.
- BEL rating
- Buy; target price of Rs 490, implying 19% upside.
- Data Patterns rating
- Buy; target price of Rs 5,545, implying 22% upside.
- BHEL rating
- Underperform; target price of Rs 270, with the valuation summary showing 38% downside.
- Order-book coverage
- HAL: 7.7 times FY26 revenue; BEL: 2.6 times; Data Patterns: 1 time.
- HAL earnings outlook
- Jefferies sees 16% EPS CAGR over FY26-FY30E.
- BEL pipeline
- Jefferies identifies a visible medium-term pipeline of Rs 1.2 lakh crore.