Given worries about sustainable operational growth and doubts about the sustainability of a +20% operating margin under the new pricing policy that will affect PBT margin, Bharat Electronics Ltd. (BEL) has been trading at a significant discount to other large cap industrial companies, according to Antique Stock Broking.
“With robust order book, strong order pipeline, and consistent delivery of +20% margin, BEL has been able to defy these concerns successfully. We continue to maintain Buy rating on the stock with a target price of ₹135 per share,” the note stated.
“Recent pick-up in clearance of defence orders from MoD has helped BEL surpass its order inflow guidance of INR 200 bn for FY23. It also assuages investor concerns on missing order inflow guidance given weak order inflow of INR 38 bn in 9MFY23. Large ticket order finalization has helped BEL further beef-up its order book to ₹670 bn. With a robust order book and an equally strong pipeline expected to materialize in the near to medium term, BEL is well on track to register earnings CAGR of 20% over FY22-25E,” Antique Stock Broking added.
Bharat Electronics (BEL) announced ₹150 bn of orders in the last week. Stock is down 15%+ from 1-yr peak and underperformed peer Hindustan Aeronautics (HAL) year-to-date or YTD, as per global brokerage Jefferies.
“We believe this offers a good entry point as recent ordering brings it closer to the FY23E ₹200 bn guidance. Unannounced orders should add to this. Defence indigenisation, revenues from non-defence initiatives, and double-digit execution growth should drive upside, in our view,” Jefferies added while maintaining Buy rating on BEL shares with a target price of ₹125 apiece.
The views and recommendations made above are those of individual analysts or broking companies, and not of shaebaz.
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