Multibagger Alert: This PSU has given investors 129% in the past year.
Non-defence business likely to keep the stock buzzing.
The stock of India’s largest defence electronics firm, Bharat Electronics Limited (BEL) has given investors stellar returns of 129.58% over the last year. The share price stood at Rs 90.1 on October 19, 2020, and since then, the stock has more than doubled investor wealth.
In Q1FY22, BEL reported revenue of Rs 1,575.14 crore, down by 4.04%, attributed to the lower execution on account of the COVID disruption and delay in material clearance from government agencies. PBIDT (ex. OI) was reported at Rs 70.03 crore, down by 52.06% YoY while, PAT came in at Rs 13.05 crore, down by 72.54%. While the Q1 performance has been below expectations, BEL has maintained guidance at 15-17% growth and PBIDT margin guidance at 22% for FY22. The company is very confident of achieving this as 3Q and 4Q are generally higher in terms of deliverables.
The Union Budget of 2021 proposed a defence budget of Rs 4.78 lakh crore for FY21-22, which included capital expenditure worth Rs 1.35 lakh crore, representing a 19% increase in defence capital expenditure. This is the highest-ever increase in capital outlay for defence in 15 years and plays out well for a company with high exposure to the defence budget like BEL.
Meanwhile, the management remains quite optimistic about upcoming opportunities in defence as well as non-defence space as the government focus on indigenization, spending and initiatives such as PLI schemes. To capitalize on huge opportunities and mitigate the risk of defence, BEL is diversifying into different business verticals such as Medical Electronics, Energy Storage, Unmanned systems, Space Electronics and Systems, Software Service, etc.
The company has a very healthy order book position, which stands at Rs 54,489 crore as of July 1, 2021. The order book is 4x TTM revenue and provides strong revenue viability for the next 2-3 years.
Looking ahead, the management of BEL have indicated a strong tender pipeline from large size orders like D29, Shakti missile system, QRSAM, LRSAM, ammunition, etc. and maintained its order inflow guidance of Rs 15,000 crore- Rs 17,000 crore for FY22E.
Bharat Electronics Limited (BEL) is an Indian state-owned aerospace and defence company. It is has been granted Navratna status by the Government of India (GoI) and is of strategic importance to the GoI as it is the dominant domestic supplier of defence electronics equipment to the Indian Defence Forces.
At 12.40 pm on Wednesday, the stock is trading at Rs 206.10, down marginally by 0.36% or Rs 0.75 per share on BSE. The 52-week high of the scrip is recorded at Rs 221.50 and the 52-week low at Rs 86.35 on the BSE.
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