See Bull Run's current pages for Bharat Electronics and Hindustan Aeronautics. For the analytical framework behind this sector, see Bull Run's How to Analyse Defence Stocks in India.

Q1 FY27 scorecard: same revenue, very different profit structure

The revenue comparison could hardly be closer

BEL:

₹5,533.06 crore.

HAL:

₹5,515.17 crore.

BEL generated only about ₹18 crore more operating revenue.

But BEL is growing revenue much faster

This reflects strong execution across BEL's broad electronics pipeline.

BEL entered Q1 with demand across:

• radars;
• electronic warfare;
• communications;
• avionics;
• electro-optics;
• seekers;
• weapon electronics;
• fuzes;
• cybersecurity;
• tank electronics.

BEL is a portfolio of hundreds of electronic subsystems

A major strength of the model is that no single fighter-aircraft production line defines the whole company.

Its products can be installed on:

• aircraft;
• helicopters;
• ships;
• submarines;
• missiles;
• tanks;
• air-defence networks;
• border systems;
• command centres.

Electronics content per defence platform keeps increasing

A modern military platform increasingly contains:

• AESA radars;
• electronic-warfare suites;
• secure communications;
• mission computers;
• data links;
• electro-optical systems;
• software;
• jammers;
• cybersecurity.

This creates a structural tailwind for BEL even when the number of physical platforms grows more slowly.

HAL sells the platform itself

Major platforms include:

• LCA Tejas;
• LCH Prachand;
• ALH Dhruv;
• LUH;
• HTT-40;
• Do-228;
• Su-30MKI production and upgrades;
• aero engines;
• MRO.

HAL's ₹2.545 lakh crore order book demonstrates that scale

The order book stood at approximately ₹2,54,538 crore at March 31, 2026.

That is approximately:

3.5 times BEL's July 1 order book.

The order-book dates are different

They should therefore not be treated as a perfectly simultaneous snapshot.

The scale conclusion, however, is unaffected: HAL carries the much larger backlog.

Aircraft contracts naturally create giant backlog numbers

In September 2025, the Ministry of Defence signed a contract with HAL for:

• 97 LCA Mk1A aircraft;
• 68 fighters;
• 29 twin-seat aircraft;
• associated equipment.

Contract value:

more than ₹62,370 crore excluding taxes.

One LCA order is almost as large as BEL's entire current order book

This illustrates the fundamental business-model difference.

BEL needs many radar, communication, avionics and weapons-electronics programmes.

HAL can add tens of thousands of crores with one platform order.

HAL also carries the 156-aircraft-equivalent LCH Prachand programme

The March 2025 contracts cover:

• 90 LCH for the Indian Army;
• 66 LCH for the Indian Air Force;
• training and associated equipment.

Total value:

approximately ₹62,700 crore excluding taxes.

The LCH programme is now moving into industrialization

HAL inaugurated an additional LCH production line at its new helicopter factory during April 2026.

In August, it expanded private-industry participation in helicopter structures.

Adani Defence and BEML will manufacture LCH fuselage structures

Under announced partnerships:

• BEML is to manufacture 48 fuselage structures;
• Adani Defence is to manufacture 42.

This is strategically significant.

HAL is shifting from factory manufacturing to ecosystem manufacturing

The production challenge for 156 helicopters is too large to solve only inside HAL facilities.

More private suppliers can increase:

• throughput;
• parallel production;
• local industrial capacity;
• future export readiness.

BEL already has an ecosystem-style supply model

Electronics manufacturing naturally involves networks of:

• PCB suppliers;
• precision manufacturers;
• RF component suppliers;
• software providers;
• electro-optic vendors;
• mechanical fabricators.

This lets BEL scale programmes without manufacturing every component internally.

HAL's FY26 contract additions were enormous

During FY26 HAL disclosed:

• more than ₹69,600 crore of manufacturing contracts;
• more than ₹17,300 crore of repair-and-overhaul contracts.

Major manufacturing orders included:

• 97 LCA Mk1A;
• six ALH MkIII Maritime Role helicopters;
• eight Do-228 aircraft;
• 10 ALH Dhruv NG helicopters for Pawan Hans;
• two Hindustan-228 aircraft for Guyana.

MRO is an underrated HAL business

Military aircraft remain in service for decades.

That creates recurring demand for:

• repair;
• overhaul;
• engines;
• spares;
• upgrades;
• life extension.

MRO therefore creates recurring revenue behind the headline aircraft contracts.

BEL has its own recurring installed-base economics

Radars and electronic systems also require:

• spares;
• maintenance;
• software upgrades;
• replacement modules;
• services.

Recent BEL order disclosures repeatedly include spares and services alongside new equipment.

BEL kept adding orders after the Q1 order-book date

Public disclosures included additional orders of approximately:

• ₹847 crore after July 13;
• ₹541 crore after July 31;
• ₹730 crore after August 10.

The order categories included:

• communications;
• radar;
• avionics;
• tank subsystems;
• electro-optics;
• cybersecurity;
• jammers;
• fuzes;
• services.

Bull Run does not mechanically add those orders to ₹72,258 crore

The correct interpretation is that BEL's order inflow remained active after the July 1 backlog date.

HAL wins current Q1 PAT by a wide margin

HAL generated approximately 52% more PAT

That is extraordinary given virtually identical revenue.

But investors need to examine where the profit comes from.

HAL had approximately ₹900 crore of other income

This other income represents roughly 16% of operating revenue.

It also represents a very large share of pre-tax profit.

HAL's huge cash and investment balances contribute to earnings

Aerospace programmes often create:

• customer advances;
• milestone payments;
• large cash balances.

Interest and treasury income can therefore become meaningful.

This is real shareholder income—but not aircraft manufacturing margin

HAL's treasury income is economically valuable.

But it should be separated conceptually from platform manufacturing.

Simple PAT-to-revenue margins are still informative with that caveat

BEL:

₹1,048 crore / ₹5,533 crore = approximately 18.9%.

HAL:

₹1,590 crore / ₹5,515 crore = approximately 28.8%.

These are Bull Run calculations.

BEL's earnings growth lagged its revenue growth

Revenue increased 25.27%.

PBT increased only 8.81%.

PAT increased 8.17%.

Material cost was an important reason

Reported material consumption increased much faster than revenue during the quarter.

This can reflect:

• programme mix;
• high hardware content;
• execution timing;
• component procurement.

Investors should monitor whether margins normalize as project mix changes.

HAL's revenue growth was slower but earnings conversion was better

Revenue increased approximately 14.45%.

PAT increased approximately 14.88%.

The growth rates were broadly matched.

HAL's Q1 profit seasonality needs context

Defence aerospace execution is often back-end loaded.

Aircraft delivery milestones can concentrate revenue in particular quarters.

Q1 should therefore not be annualized blindly.

The LCA Mk1A programme has a critical supply-chain variable

The fighter uses the GE F404-IN20 engine.

The Ministry of Defence disclosed that HAL signed an agreement with GE in November 2025 for 113 F404 engines and support for the 97-aircraft programme.

Engine deliveries are scheduled from 2027 to 2032.

Engine supply timing is fundamental to aircraft revenue

HAL cannot recognize fighter-aircraft delivery revenue simply because the airframe factory has capacity.

It needs:

• engines;
• radar;
• electronic warfare;
• weapons integration;
• certification;
• customer acceptance.

This creates more platform-concentration risk than BEL

A delay in one critical component can slow delivery of an entire aircraft.

BEL's broader electronics portfolio can often absorb delays in one programme with execution from others.

Yet HAL controls much more value per successful delivery

A fighter or attack helicopter combines:

• airframe;
• engine integration;
• avionics;
• weapons;
• flight controls;
• testing;
• training;
• support.

The revenue ticket per unit is enormous.

BEL often supplies electronics into the same platforms

This creates an important ecosystem point.

BEL and HAL are not pure competitors.

They are often complementary participants in the same defence programme.

A Tejas aircraft can create revenue for both

HAL manufactures and integrates the aircraft.

BEL can participate through electronics, radar, communication or other systems depending on programme content.

India's defence indigenization can therefore expand both companies simultaneously.

BEL currently has much higher standardized ROCE

BEL's 34.8% ROCE is exceptional

Electronics can be much less capital intensive than aircraft manufacturing.

BEL does not need an airfield-sized production complex for every product category.

Its value is concentrated in:

• engineering;
• IP;
• system integration;
• software;
• qualified manufacturing;
• customer relationships.

This supports high capital turnover

Higher asset turnover combined with strong margins can produce very high ROCE.

This is one reason BEL deserves a premium to many heavy defence manufacturers.

HAL's lower ROCE does not mean weak economics

Aircraft manufacturing requires:

• large factories;
• tooling;
• flight-test infrastructure;
• airfields;
• inventory;
• long production cycles;
• large R&D programmes.

Capital intensity is structurally higher.

HAL nevertheless produces enormous absolute free cash flow

HAL's figure is more than five times BEL's.

This is one of the strongest arguments for the aircraft manufacturer.

HAL also has stronger standardized cash conversion

Operating cash flow to net profit:

• HAL: approximately 1.20x;
• BEL: approximately 0.25x.

BEL's low recent conversion needs interpretation

Defence electronics working capital can swing because of:

• inventories;
• customer milestones;
• receivables;
• advances;
• project timing.

One standardized ratio should therefore not be treated as a permanent structural flaw.

Cash conversion is still worth monitoring

High accounting profit is more valuable when accompanied by cash.

BEL's strong ROCE makes the working-capital trend particularly important.

Valuation is where HAL becomes difficult to ignore

The companies have almost identical market capitalisations

BEL is worth approximately ₹3.004 lakh crore.

HAL is worth approximately ₹2.957 lakh crore.

The difference is less than ₹5,000 crore.

Yet HAL generates much more trailing earnings

This is why its P/E is only around 31.7x.

BEL trades around 48.9x.

HAL's P/E is roughly one-third lower.

Price-to-book tells the same story

BEL:

12.5x.

HAL:

7.2x.

But BEL earns higher ROE and ROCE, which supports a higher book-value multiple.

The valuation therefore reflects opposite strengths

BEL deserves a quality premium for:

• 34.8% ROCE;
• broad programme exposure;
• electronics content growth;
• asset-light economics relative to aircraft manufacturing.

HAL deserves an earnings premium for:

• ₹2.545 lakh crore backlog;
• large platform contracts;
• strong cash generation;
• higher current PAT;
• lower earnings multiple.

HAL's biggest catalyst is production execution

The order book is already secured.

The challenge is producing and delivering:

• LCA Mk1A;
• LCH Prachand;
• HTT-40;
• ALH;
• LUH;
• Do-228;
• engines and accessories.

Faster throughput converts backlog into revenue.

BEL's biggest catalyst is rising electronic content

Every new:

• fighter;
• warship;
• missile battery;
• air-defence system;
• armoured platform;

requires increasingly sophisticated electronics.

BEL can grow even without owning the final physical platform.

BEL also has broader non-platform opportunities

Recent announcements include areas such as:

• cybersecurity;
• GeoAI;
• GIS;
• medical electronics;
• perimeter security.

These can diversify revenue outside conventional defence electronics over time.

HAL has a different diversification path

Its future opportunity includes:

• civil helicopters;
• regional aircraft;
• aero-engine manufacturing;
• international aerospace supply chains;
• space structures;
• MRO;
• exports.

The Safran relationship is important

HAL and Safran signed a long-term agreement in July 2026 for turbine forgings used in CFM LEAP aircraft engines.

This expands HAL's role inside a global commercial-aerospace supply chain.

Global aerospace manufacturing could reduce government-customer concentration

HAL remains overwhelmingly linked to Indian defence procurement.

International commercial-engine work can diversify:

• customer mix;
• currency exposure;
• manufacturing know-how;
• export revenue.

What must Bharat Electronics prove?

• 25%-level revenue growth should translate into faster PAT growth.
• Material-cost pressure should normalize.
• The ₹72,258 crore backlog should remain well replenished.
• New radar, communications and electronic-warfare programmes need timely execution.
• Cash conversion should improve.
• Non-defence businesses should become economically meaningful without diluting ROCE.
• A roughly 49x P/E requires sustained high returns.

What must HAL prove?

• LCA Mk1A execution must accelerate.
• Engine and subsystem supply chains must support delivery schedules.
• The 156-LCH programme requires successful production scaling.
• Private-industry fuselage partnerships need smooth integration.
• HTT-40 and other platform deliveries should progress.
• Other income should not mask manufacturing-margin changes.
• ROCE should improve as the huge order book converts.
• Exports and global aerospace work should become a larger revenue contributor.

What could make BEL outperform HAL?

Electronics content per defence platform can grow faster than the number of platforms themselves.

If BEL sustains high-teens to 20%-plus revenue growth while maintaining 30%-plus ROCE, earnings can compound without the production bottlenecks associated with complete aircraft.

What could make HAL outperform BEL?

HAL already has the orders.

If LCA, LCH and trainer production scales successfully, the company can convert a ₹2.5 lakh crore backlog into years of revenue while trading at a much lower starting P/E.

Which company generated more Q1 revenue?

Bharat Electronics, but effectively by nothing.

₹5,533.06 crore versus HAL at ₹5,515.17 crore.

Which company is growing faster?

Bharat Electronics by Q1 revenue growth.

25.27% versus HAL at 14.45%.

Which generated more Q1 PAT?

HAL.

Approximately ₹1,590 crore versus BEL at ₹1,048 crore.

HAL's large other-income contribution should be considered when interpreting the gap.

Which has the larger order book?

HAL by a very wide margin.

Approximately ₹2.545 lakh crore at March 31 versus BEL at ₹72,258 crore on July 1.

Which has higher ROCE?

Bharat Electronics.

Approximately 34.8% versus HAL at 16.1%.

Which has stronger historical free cash flow?

HAL.

Bull Run records approximately ₹44,070 crore of cumulative five-year free cash flow versus BEL at around ₹8,400 crore.

Which is more diversified across individual programmes?

Bharat Electronics.

It participates across radars, communications, EW, avionics, missiles, naval systems and many other electronics categories.

Which has larger platform-level upside?

HAL.

Complete fighter and helicopter contracts can individually exceed ₹60,000 crore.

Which stock is cheaper?

HAL on current trailing earnings and book value.

Approximately 31.7x P/E versus BEL around 48.9x.

Which is better: Bharat Electronics or HAL?

HAL currently has the stronger earnings-and-valuation profile. It generates significantly more PAT from essentially identical Q1 operating revenue, carries more than three times BEL's order book, has much stronger five-year cumulative free cash flow and trades at a materially lower P/E.

Bharat Electronics currently has the stronger capital-efficiency and programme-diversification profile. Revenue is growing faster, standardized ROCE is more than twice HAL's and its electronics portfolio is spread across many defence platforms rather than concentrated around a few aircraft-production programmes.

The raw PAT comparison must be handled carefully because HAL also earns substantial other income from its financial resources and customer-advance structure.

The two companies therefore represent different ways to own India's defence-indigenization cycle.

BEL monetizes the electronics inside the weapon system.

HAL monetizes the weapon platform itself.

At September 2026 valuations, HAL offers the stronger current backlog-to-valuation and cash-generation case, while BEL offers the stronger ROCE and diversification case. HAL can outperform if aircraft and helicopter delivery rates accelerate; BEL can outperform if rising electronic content allows 20%-plus growth without sacrificing its exceptional capital efficiency.

Frequently asked questions