Bharat Electronics (BEL), the zero-debt defence PSU giant, has given zero returns year-to-date. In January 2025 month so far, the stock has dipped by nearly 7% and is currently trading below Rs 275 levels. However, this has brought a buy-on-dips opportunity in BEL share price, as brokerage Axis Securities recommends BUY for the target of Rs 315. Robust order book, leading supplier of defence equipment and further indigenization are among the key reasons to buy BEL shares.
BEL Share Price:
After market hours of January 23, BEL stock price stood at Rs 274 levels on BSE, with a market cap of Rs 2,00,287.94 crore. The stock was up by 1.4% in the closing bell. However, BEL has corrected sharply from its 52-week high of Rs 340.35 apiece and is a little over Rs 100 from its 52-week low of Rs 171.70 apiece.
BEL is down by 1.4% on a weekly basis, while the stock dipped by 6.3% on a month-on-month and lower by 9% in a six-monthly basis. Year-to-date, the stock dropped by 6.7% on BSE.
So far, BEL has rewarded investors with hefty bonus issues, stock splits and dividends.
Dividends: Since August 2001, the company has delivered 51 dividends, as per Trendlyne. In the last 12 months, the company paid about Rs 2.20 per share dividend.
Stock Splits: BEL stock price has split only once and in the ratio of 1:10. The first ever stock split was carried out in March 2017, where its face value of Rs 10 each was trimmed to Re 1 each.
Bonus Issue: BEL has paid three bonuses so far. The first bonus issue was 2:1 in September 2015, while the second bonus was 1:10 and took place in September 2017. The last bonus issue was of 2:10 and it took place in September 2022.
Axis Securities On BEL Share:
In its latest report, Axis Securities said, “Management is optimistic about maintaining a minimum growth rate of 15% annually over the next five years, driven by a strong order book and a growing defence budget. We expect BEL to report Revenue/EBITDA/APAT CAGR of 15%/17%/19% respectively over FY23-FY26E. The stock is currently trading at 46x and 40x FY25E/FY26E EPS. We recommend a BUY rating on the stock with a TP of Rs 315/share.”
Axis Securities highlighted 3 key reasons to buy BEL stock:
1. As of September 30, 2024, Bharat Electronics Limited (BEL) reported an order book of Rs 74,595 Cr, 3.7 times its FY24 revenue, offering strong revenue growth visibility over the medium term. The company remains confident in meeting its guided order inflow target of Rs 25,000 Cr for FY25. Additionally, the government’s increasing capital budget allocations for the defence sector and its focus on implementing reforms to enhance domestic defence manufacturing and reduce imports are expected to support order inflows over the medium to long term.
2. BEL, the leading domestic supplier of defence electronics to the Indian armed forces, benefits significantly from its position as the largest domestic electronics manufacturer. Its scale enhances cost efficiency and competitiveness. The company secures approximately 80-90% of its defence orders on a nomination basis, providing a stable and reliable revenue stream. BEL’s EBITDA margins are expected to remain strong at 24% or higher.
3. The Government of India has taken significant steps to support domestic manufacturers by mandating increased procurement from local suppliers. As a result, the share of domestic procurement has risen from 55% in 2019 to 75% and is expected to grow further in the coming years. Additionally, boosting defence exports remains a top priority, with a target of reaching Rs 500 Bn by 2029. Bharat Electronics Limited (BEL) is strategically positioned to capitalise on these opportunities and expand its market share.
About BEL:
BEL, a Navratna DPSU, was established in 1954 under the Ministry of Defence, the GOI, to cater to the electronic equipment requirements of the defence sector. The GOI remains BEL’s largest shareholder, with a current shareholding of 51.14%. It is the dominant radar, communication, and electronic warfare equipment supplier to the Indian armed forces.
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