Prabhudas Lilladher has maintained its ‘Hold’ rating on BEML Limited with a target price of Rs 4,142. The latest research note highlights persistent execution challenges impacting BEML’s profitability in Q1FY26, despite management’s steadfast optimism on growth and exports. The research attributes near-term caution to lower order inflows and supply chain disruptions but lauds the long-term story driven by defense modernization, rail expansion, and improved export performance. Investors are advised to keep a close watch on order book health, execution pace, and operational margins.

BEML’s Q1FY26: Muted Numbers, Yet Order Book Remains Buoyant

Flat Revenue Amid Execution Hurdles
BEML reported flat year-on-year revenue at Rs6.3 billion for Q1FY26, a reflection of continued execution bottlenecks and lingering supply chain snags. The quarter’s lackluster performance was further underscored by an EBITDA loss of Rs493 million, only slightly improved from a Rs501 million loss in Q1FY25.

Order Influx Weakens, But Pipeline Promising
Order intake for the quarter witnessed a 29% year-on-year dip, totaling just Rs4.4 billion. However, year-to-date orders remain robust at Rs29 billion, suggesting a modest recovery in the coming quarters. The cumulative Q1FY26 order book stands at Rs144.3 billion—equivalent to 3.6 times trailing twelve months’ sales—which the management expects to grow to Rs220 billion by year-end.

Management Stands Pat on Guidance Despite Profitability Pressures

FY26 Target Remains Intact
Despite immediate setbacks, BEML’s management has reiterated guidance for 20% annual revenue growth with an anticipated 150-basis-point expansion in EBITDA margin for FY26. This confidence is anchored on anticipated improvements in export executions and relief in supply chain constraints.

Margin Performance Under Scrutiny
Gross margin slipped by 210 basis points year-on-year to 48.8%, signaling stress despite reductions in employee costs and other operating expenses. At the bottom line, the company posted a net loss of Rs641 million, improving year-on-year but still undershooting analyst expectations.

Strategic Segments: Exports, Vandé Bharat, and Defense

Exports and New Avenues Gain Traction
Export contribution is projected to reach a new high of 4% in FY26, buoyed by greater traction in mining, construction, and the rolling stock segments. The iconic Vandé Bharat rolling stock initiative remains on course, expected to account for around 10% of FY26 revenues.

Defense Share Set to Rise
Defense is emerging as a significant vertical, projected to comprise roughly 30% of the revenue mix in FY26 (up from 27% in FY25). The expansion into advanced defense platforms, engines, and aerospace is expected to be a key driver.

Key Financial Metrics and Valuation

Solid Multiyear Growth Trajectory Projected
BEML’s revenue is estimated to surge from Rs40.2 billion in FY25 to Rs59.7 billion by FY27—a compound annual growth rate of over 21%. EBITDA margins are forecasted to strengthen steadily, climbing to 14.9% by FY27. Net profit is expected to more than double in two years, from an estimated Rs2.9 billion in FY25 to nearly Rs5.95 billion in FY27.

Valuation Remains Stretched, Justifies ‘Hold’ Call
At the current market price of Rs4,079, the stock is trading at 39.8x FY26E and 28.6x FY27E estimated earnings, illustrating a premium to long-term average valuations. The firm’s sum-of-the-parts based target remains unchanged at Rs4,142, implying limited near-term upside.

Stock Performance: Rangebound with Volatility

Recent Correction and Long-term Prospects
BEML’s share price has retreated by nearly 8% over the past month but retains a 6.3% gain over the past year, albeit trailing benchmarks. The broader price band fluctuated between Rs2,346 and Rs4,875 over the past 52 weeks, indicating heightened volatility.

Ownership and Market Standing
Promoters hold a majority stake at 53.86%, while domestic institutions trail at 18.74%. The stock commands a market capitalization of Rs170 billion, underlining its stature in India’s industrial landscape.

Investment Outlook: What Investors Should Watch

Short-term Uncertainty, Long-term Promise
Prabhudas Lilladher urges investors to adopt a wait-and-watch approach, emphasizing keen monitoring of pending orders, pace of delivery, and operating leverage benefits. While supply chain resolution and export boost could surprise on the upside, the elevated valuation and muted immediate profitability constrain significant upswing in the near term.

Risks and Catalysts to Track

Recovery in execution pace and easing supply bottlenecks

Timely conversion of order pipeline into revenue

Sustained expansion in high-value export and defense businesses

Ability to defend and improve margins despite operational headwinds

Actionable Levels for Investors

Target Price and Risk-Reward

Target Price (TP): Rs4,142 per share

Current Market Price (CMP): Rs4,079

Upside from Current Levels: Marginal (

Recommendation: Hold—for now; revisit if execution improves sharply or stock corrects towards lower valuation multiples

Bottomline for Investors

While BEML’s medium to long-term business case remains robust—driven by national priorities in defense and railways as well as the transformation of its export profile—the company must navigate near-term operational and profitability challenges before unleashing meaningful shareholder value. Investors with a longer horizon may consider accumulating on dips, but caution is certainly warranted at prevailing valuations.