130,355% Up, 1:10 Split, 80% Dividend: Zero-Debt Defence PSU Stock Is High Conviction Pick; PL Sets Rs 341/TP

Brokerage Prabhudas Lilladher has added defence PSU giant, Bharat Electronics to its high conviction picks. The brokerage recommends accumulate on BEL for target price of Rs 341. BEL share price has corrected significantly in the past few weeks. The stock ended the trading week of October 14-18, on a flat note and holds around Rs 287 levels. Despite this, BEL is among the star performing defence stocks in the long-term.

In its report, Prabhudas Lilladher said, "BEL's long-term prospects remain robust given 1) healthy order backlog of ~Rs767bn (3.7x TTM revenue), 2) ~Rs500bn defense opportunity pipeline over the next 2 years (including 5-6 programs worth Rs50-100bn each) 3) diversification into non-defense verticals such as civil, aviation, infrastructure and rail & metro including 5-6 year opportunity to supply Kavach to Indian Railways."

PL further added, "We expect company to report revenue/adj. PAT CAGR of 17.6%/17.3% over FY24-26E. Recent correction offers a good opportunity to accumulate for LT gains."

The brokerage has set Rs 341 target price on BEL.

Currently, BEL is at Rs 287 on NSE with market cap of Rs 2,09,790.65 crore. The stock is down by 16% from its 52-week high of Rs 340.50 apiece that was recorded on July 10, 2024.

Notably, BEL's all-time gains is a breathtaking by 130,354.55%. On NSE, once upon a time, the stock was merely at Rs 0.22 per share on January 1, 1999. This price levels are adjusted to BEL's stock splits, bonus issue, and dividends over the years.

BEL has a strong track record of bonuses, and dividends, while the stock has split only once.

Bonus Issue: So far, 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: Since August 2001, BEL has distributed 51 dividends, 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%.

Stock Split: BEL has split only once and that was in March 2017. The 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. The latest dividend payout by BEL was Rs 0.80 or 80% for which it turned ex-dividend in August 2024.