Brokerage Prabhudas Lilladher has added Bharat Electronics Limited (BEL), a major defense PSU, to its high-conviction picks. They recommend accumulating shares of BEL with a target price of Rs 341. The stock has seen a significant correction in recent weeks, closing flat during the trading week of October 14-18 at around Rs 287. Despite this decline, BEL is considered one of the top-performing defense stocks for the long term.
According to Prabhudas Lilladher, BEL’s long-term prospects are strong due to several factors:
- A healthy order backlog of approximately Rs 767 billion (3.7 times the trailing twelve months’ revenue).
- A defense opportunity pipeline of about Rs 500 billion over the next two years, which includes 5-6 programs valued between Rs 50-100 billion each.
- Diversification into non-defense sectors such as civil aviation, infrastructure, and rail & metro, including a 5-6 year opportunity to supply the Kavach system to Indian Railways.
The brokerage anticipates a revenue and adjusted profit after tax (PAT) compound annual growth rate (CAGR) of 17.6% and 17.3%, respectively, over FY24-26. They believe the recent price correction provides a good opportunity for long-term gains.
Currently, BEL is trading at Rs 287 on the NSE, with a market capitalization of Rs 2,09,790.65 crore. The stock is down 16% from its 52-week high of Rs 340.50, reached on July 10, 2024.
Historically, BEL has demonstrated remarkable performance, with all-time gains of 130,354.55%. At one point, the stock traded as low as Rs 0.22 per share on January 1, 1999. This remarkable appreciation includes adjustments for stock splits, bonuses, and dividends over the years.
BEL has conducted three bonus issues, providing a total of five free shares to its shareholders. The first bonus was a 2:1 split in September 2015, followed by a 1:10 split in September 2017, and another 2:1 split in September 2022.
In terms of dividends, BEL has distributed 51 dividends since August 2001. In the last 12 months, the company provided dividends amounting to Rs 2.2 per share, yielding 0.79% currently. The last dividend payout was Rs 0.80 or 80%, which became ex-dividend in August 2024.
Overall, Prabhudas Lilladher’s report underscores BEL’s robust fundamentals and growth potential, making it an attractive option for long-term investors.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. The content reflects the opinions of the author and is based on sources believed to be reliable. However, we do not guarantee the accuracy or completeness of the information presented. Investing in stocks involves risks, and it is advisable to conduct thorough research and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.
Leave a Reply