Zero-debt company, Bharat Electronics (BEL) surged by about 5% on October 29, on the occasion of Dhanteras. The bullish trend in BEL is due to the defence PSU giant's strong performance in Q2FY25 with the outlook intact, which has made brokerages optimistic about BEL'S growth prospectus ahead. Brokerage JM Financial has recommended BUY on BEL for a target price of Rs 360, which would be its all-time high if touched. BEL has a strong record of bonus issues, splits, and dividend payments. The stock's all-time gains are mind-boggling into six-digit in percentage.
BEL Share Price:
The large-cap defence stock ended at Rs 283.25 apiece on BSE, up by 4.89% on NSE with a market cap of Rs 2,07,049.49 crore. BEL is among the top defence companies backed by the government in terms of market value. The stock's current all-time high is at Rs 340.50 apiece.
YTD, BEL stock zoomed by 53.15% on NSE. But, BEL's all-time gains are extraordinary by 128,650%. The stock price was at Rs 0.22 on January 1, 1999.
The company has a strong track record of bonuses, and dividends, while the stock has split only once.
Bonus Issue: Up till now, BEL has delivered 3 bonuses, but in total has given five free shares. The first bonus issue was 2:1 in September 2015, meaning 2 bonus shares on the existing 1 share. While the second bonus issue was 1:10 in September 2017, meaning, 1 bonus share on the existing 10 shares. And similarly, the last bonus issue was 2:1 in September 2022.
Dividends: BEL has distributed 51 dividends since August 2001, as per Trendlyne data. In the last 12 months, BEL delivered dividends of Rs 2.2 per share. Currently, it has a dividend yield of 0.79%. The latest dividend payout by BEL was Rs 0.80 or 80% for which it turned ex-dividend in August 2024.
Stock Split: The heavyweight stock has split only once. In March 2017, BEL carried a split ratio was 1:10, meaning 1 equity share of a face value of Rs 10 of BEL was split into ten shares with a face value of Rs 1 each.
Q2FY25: In the second quarter of FY25, BEL posted net profit of Rs 1091.27 crore, as against Rs 812.34 crore recorded in the corresponding period of the previous year. In Q2FY25, the company also achieved a turnover of Rs. 4425.29 crore as against Rs. 3918.13 crore recorded in the corresponding period of the previous year.
In H1FY25, the company's PAT was at Rs 1867.41 crore, with a growth of 39.03% over the Profit After Tax (PAT) of Rs. 1343.18 crore recorded in the corresponding period of the previous year. While its overall turnover is at Rs 7364.82 crore recorded in the corresponding period of the previous year.
JM Financial On BEL:
According to JM Financial, YTD order inflows came in at INR 77bn in BEL, and order book as on 2QFY25 stands at INR 746bn (3.5x TTM sales). BEL targets order inflows of INR 250bn in FY25 given strong order prospects driven by government focus on product localization and increasing government capex on defence sector. Increasing opportunity in Naval fleet, backed with focus on localization and upgradation of existing fleets, offer a huge opportunity for BEL from Indian Navy. Order pipeline for FY26 stands at INR 500bn (incl. QRSAM order- expected to be concluded in 1QFY26).
JM also stated it maintained revenue growth guidance of 15% and EBITDA margins of 23%-25% for FY25. Capex planned for FY25 stands at INR 8bn. BEL will continue to explore new growth opportunities through diversification, capability enhancement, competitiveness, modernization and export initiatives.
On the valuation, JM's note said, "We remain positive on BEL given strong order backlog (INR 746bn) providing revenue visibility, sustained steady margin profile, healthy order prospects, increasing business opportunity from Indian Navy (indigenization and increasing fleet), continuous focus on diversification & exports markets and indigenisation push by GoI. We have assumed order inflows of c.INR 704bn for FY25 and FY26 combined, vs management guidance of INR 750bn. We expect revenue and PAT CAGR of 20% over FY24 - FY26E. We maintain BUY rating on stock with TP of INR 360 valuing it at PE of 45x FY26E, factoring in strong order pipeline and defence outlook."
Bharat Electronics Limited (BEL) is a Navratna PSU under the Ministry of Defence, Government of India. It manufactures state-of-the-art electronic products and systems for the Army, Navy and the Air Force.
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