BEL share price surges nearly 4% since Q2 results; brokerage bullish on stock – check target price

BEL share price: On the back of a strong order book and robust second-quarter earnings, domestic brokerage Edelweiss is bullish on state-owned defence company – Bharat Electronics Limited (BEL) and maintained a ‘Tactical Buy’ rating on the stock with a potential upside of around 20 per cent on a long-term basis.

Shares of BEL have gained nearly 4 per cent since its July-September quarter earnings for FY23 were announced on October 27, 2022. The stock on Tuesday closed over 1.5 per cent to Rs 108.5 per share on the BSE. In the last one year, it has gained over 62 per cent and jumped 54 per cent year-to-date.

Q2 Performance

BEL reported strong Q2 for the financial year 2022-23 (FY23) results broadly in line with Street’s estimates. The revenue came at Rs 3,946 crore, up around 8 per cent Year-on-Year (YoY) and PAT (profit after tax) came at Rs 611 crore flat YoY, driven by better revenues and operating leverage.

Outlook

Edelweiss believes BEL will regain and sustain double-digit revenue growth in FY23-24, based on strong order book positions, strong project line-ups, and easing of supply chains. Order book stands at Rs 52,795 crore and after adjusting for Triton Electric vehicle contract of Rs 8,060 crore, the order book would be Rs 60,855 crore, it said.

With a strong order book in hand and parallel execution capability for multiple platforms, BEL has strong P/L growth visibility, the brokerage said, adding that the company is emerging as a key beneficiary of an increase in defence capital expenditure.

Valuation

The brokerage expects BEL’s top-line growth to improve for FY23/24 given better new order growth in the past two years & normalisation in the supply chain. It raises FY24E earnings by around 12 per cent and using 26x PE multiple. It raises the target price to Rs 130 at 26x FY24 earnings.

About Company

Bharat Electronics Ltd (BEL) is a Navratna DPSU under the Ministry of Defence, established in 1954 at Bengaluru, to cater to the strategic needs of the Indian Defence services.

Over the years, BEL has grown into a multi-product, multi-technology, multi-unit company engaged in the development, design, manufacturing, supply and support of a wide range of defence electronics products, systems, strategic components, services and select non-defence products, among others.