According to the latest exchange data, there are currently 56 stocks that boast a market capitalisation exceeding ₹one lakh crore. With their remarkable performance, Bharat Electronics (BEL) shares are currently 3.71% away from entering the ₹1 lakh crore mcap club.
After hitting a one-year low of ₹87 apiece in March, the shares bounced back strongly to the current level of ₹132, reflecting an increase of 52%. During this period, the market capitalisation of Bharat Electronics moved to ₹96,416 crore from ₹63,595 crore.
This strong rally in the shares was primarily attributed to the company's strong financial performance and robust order wins. BEL is a Navratna PSU under the Ministry of Defence, Government of India. The company manufactures state-of-the-art electronic products and systems for the Army, Navy, and Air Force.
The company delivered remarkable performance on all fronts in Q1FY24, as healthy execution led to solid sales and operating profit growth. In addition, the company's other income also contributed to the strong net profit growth.
The revenue from operations witnessed a healthy 12.5% increase to ₹3,533 crore during Q1FY24. Operating profit grew by 29% YoY to ₹673 crore, and operating profit margin rose by 240 bps YoY to 19%.
The company posted a 47.26% YoY increase in its consolidated net profit, reaching ₹539 crore for the June quarter, driven by strong operating performance and aided by higher other income, which grew by 71% YoY to ₹140 crore.
The company's order book as of June 23 stood at a record ₹65,356 crore, led by fresh orders worth ₹8,100 crore in Q1FY24, the highest among all DPSUs, according to brokerages.
Further, the company has maintained its order inflow guidance for FY24 at ₹20,000 crore. Brokerage firm Sharekhan anticipates that this figure could potentially be exceeded if orders for QRSAM/MRSAM (Quick Reaction Surface-to-Air Missile / Medium Range Surface-to-Air Missile) kick in.
The brokerage believes BEL would play a significant role in successfully implementing the government’s Make in India and Atma Nirbhar Bharat initiatives, as it is a key defence and aerospace player.
Further, global defence companies are tying up with indigenous players, as there is a tremendous export potential for engineering services and component sourcing from India, which bodes well for BEL, the brokerage added.
The brokerage said the company has a strong manufacturing and R&D base, a robust order book, healthy order prospects, a diversifying revenue stream, and a strong balance sheet with improving return ratios. Thus, it retained its 'buy' call on the stock with a revised price target of ₹151 apiece, valuing it on FY25E EPS.
Likewise, ICICI Securities said the company stands to gain from various high-value orders, particularly, in all the platforms—missiles, fighter jets, and submarines.
These are likely to ensure a smooth runway for steady earnings growth while maintaining book-to-bill at a healthy 2.5–3x. The brokerage also kept its 'buy' rating on the stock with a target price of ₹150 apiece on 27x FY25E EPS.
Keeping its bullish stance, ICICI Securities also outlined the key risks, such as delays in ordering by third parties, a slowdown in the development of sub-components by vendors, and reduced spending in defence space.
24 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
