3 reasons why Bharat Electronics shares are down 30% from its 52-week high

Bharat Electronics hit a 52-week high of ₹340.5 per share on July 10, 2024, amid a pick-up in defence stocks on expectations of increased spending by the government on the defence sector and a push for indigenous defence manufacturing.

However, the company’s shares tumbled in the last few months because of lower-than-expected defence sector allocation in Budget 2025 and high valuation concerns. In February 2025, BEL stock tumbled 15.86%.

Below expectations defence budget

The government announced a marginal rise in overall capital expenditure (capex) to ₹11.2 lakh crore for the next financial year compared to budget estimates of 2024-25. Meanwhile, the defence budget allocation of ₹4.92 lakh crore announced in Budget 2025 fell short of market expectations.

Lower-than-expected government spending raised concerns about the future of key defence and infrastructure segments. Lower capex outlay will likely lead to fewer new order win opportunities for these companies, ultimately impacting their revenues and profitability.

As a result, BEL, along with other stocks from the defence, rail, and infra sectors, is under selling pressure. Significant volatility in broader markets has also impacted Bharat Electronics shares.

Weak industrial growth

The slowdown in domestic industrial growth and high commodity prices have also weighed on BEL and other PSU shares. Industrial production growth fell to a three-month low of 3.2% in December 2024, compared to a 5% rise in November 2024.

High defence import amid geopolitical pressure

Defence stocks like BEL also declined due to concerns that India may increase its defence imports to account for geopolitical pressure, mainly from the US, after the new Trump administration. This would hit the Make in India initiative, and the project would flow to local manufacturers.

What lies ahead for the stock?

According to experts, Bharat Electronics, along with other defence shares, have fallen between 25% and 50% from last year’s high level, leading to some correction in their valuation. However, investors should track the company’s orderbook, upcoming earnings and gauge market sentiments before making any investment decision.

BEL posted better-than-expected financial results in the past two quarters. In Q3FY25, its revenue from operations increased by over 38% YoY to ₹5,771 crore, while its net profit stood at 1,312 crore, up 52.5% YoY. The company also plans to announce an interim dividend on the 5th March meeting of the board of directors.