Bharat Electronics (BEL), a defence PSU giant with Navratna status, has turned ex-dividend this week for a final dividend payout of Rs 0.80 per share. Overall, in FY24, the company is delivering a 220% dividend worth Rs 2.2 per share. BEL shares have been among the top performers in the defence sector on the NSE and BSE. YTD, this zero-debt company has surged by over 64%. There is room for more buying in BEL?
BEL Share Price:
On NSE, after market hours of August 16, BEL shares stood at Rs 303.55 apiece, with a market cap of Rs 2,21,888.34 crore. In the closing bell, the stock gained by 3.4%.
BEL has currently floating near Rs 300 levels for the past few days, correcting significantly from its 52-week high of Rs 340.50 apiece that was recorded on July 10.
Despite correcting significantly in recent days, BEL shares are still undervalued.
As per Trendlyne data, BEL stock rose 131% and underperformed its sector by 20.22% in the past year. While its Price to price-to-earning ratio is 52.33, lower than its sector PE ratio of 68.24. However, BEL's return on equity for the last fiscal year stood at 24.4%, which is strong since more than 20% of RoE indicates an efficient use of shareholder's capital to generate profit.
In a year, BEL stock gained by 135.9% on NSE, becoming a multi-bagger. BEL's 5-year performance is also robust by 848%. But BEL's all-time gains are humongous by 137,877.27% as of August 16, 2024, compared to 25 years ago when BEL shares were merely at Rs 0.22 on January 1, 1999.
BEL Stock Dividend:
BEL shares turned ex-dividend on August 14, for its final dividend of 80% worth Rs 0.80 per Equity share (having a face value of Rs.1/- each). Eligible investors will be those who are holding BEL shares in their demat accounts by the end of August 14.
Overall, BEL is distributing a 220% dividend amounting to Rs 2.2 per share for FY24.
On the current market price, BEL has a dividend yield of 0.73%.
Apart from being a top dividend-paying defence stock, BEL also has carried only one stock split so far. It was in 2017, when 1 BEL share split into ten smaller shares effective from March 16. The face value split from Rs 10 to Rs 1. Also, BEL has paid three bonuses to its shareholders since 2015, in total it distributed 5 bonuses. The first bonus reward of a 2:1 ratio in September 2015, followed by 1:10 and 2:1 bonus issues in September 2017 and 2022 respectively.
BEL Target Prices:
Sumeet Bagadia, Executive Director at Choice Broking has recommended BUY for target prices of Rs 320 and Rs 350, while stop loss is set at Rs 280.
Earlier, post Q1 results, Choice Broking in its note said, BEL is well positioned to gain from the growing list of Indigenization procurement and winning new orders on defence electronics such as high-end electronics related to defence, industrial and various civil projects.
Choice's note added, "Despite trading at rich valuation, we continue to maintain our positive stance on the BEL due to its position as the sole supplier of various equipment and systems and ongoing innovation in diverse products from tri forces."
Also, Choice added, "We have a positive outlook on BEL, supported by 1) BEL is the direct beneficiary of GOI's self-reliance on the defense sector,2) Rising defence spending across all segments (Naval, Army, Air Force), 3) Diversified business opportunities like Defence, Civil aerospace, Railway etc., 4) Focusing on system level integration, and strong order book."
Further, Morgan Stanley, a global brokerage is also bullish on BEL shares. Stanley has maintained its guidance on BEL for FY25 and further predicts that the company could receive a significant QRSAM (quick-reaction Surface-to-air missile system) order.
The highest target price on BEL is currently set at Rs 390 apiece, hinting at over 29% potential upside in the stock. This target is set by ICICI Direct.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.
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