Bharat Electronics Ltd (BEL) shares have gained 28 percent in May amid hopes of higher defence spending by the Narendra Modi-led National Democratic Alliance government.

Share Market Live

NSE

The state-owned aerospace and defence company has delivered over 33 percent returns in the last three months although the one-year return on the stock remains a little below 1 percent. In the last one year, the Sensex has returned over 13 percent.

The 10-year return on BEL is 184 percent and the scrip has outperformed the BSE frontline index, which has returned 163 percent during the same period.

An average of 36 shares was taken for delivery in May for every 100 shares bought, higher than the average daily delivery of 34 percent since January this year.

Going by the delivery volumes, the BEL stock is likely to rise more as delivery volume reflects investor confidence.

BEL's net profit rose about 20 percent to Rs 668.62 crore while total income was up 10 percent to Rs 4013.43 crore in the quarter ended March 2019.

Brokerage Geojit Financial Services is positive on BEL.

"Strong order backlog of Rs 48,000 crore (4.6x FY18 sales) provides clear visibility for the next three years. The stock is currently trading at 1-year fwd P/E of 16x, which is below the five-year average. Given BEL’s technological and execution capabilities, higher defence spending and government focus on indigenous procurement we remain positive on BEL with the buy rating," Vinod Nair, head of research at Geojit Financial Services, told Moneycontrol.

BEL shares ended up 1.75 percent at Rs 113.15 on Tuesday. The BSE Sensex ended 184.08 points lower at 40,083.54, while the Nifty shed 66.80 points to close at 12,021.70.

Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions