180% Dividends YTD: 69-Year-Old Defence Giant Wins New Orders Worth Rs 3,915 Crore, Stock Nears 1-Year High

Defence stocks have been shining in 2023 so far owing to their strong order book and new deal wins. In the latest to win a massive order will be aerospace and defence company, Bharat Electronics (BEL) who on Tuesday announced that it bagged orders worth Rs 3,915 crore since mid-September. BEL which is also among high dividend-paying stocks, announced that the company received a new order of Rs 580 crore from the Indian Army.

BEL's share price is already near its 52-week high level.

As per the regulatory filing, BEL received an order of Rs 580 crore from the Indian Army for AMC of Radars. This project will have the participation of Indian electronics and associated industries, including MSMEs, which are sub-vendors of BEL.

Further, BEL said that it has also received additional orders worth Rs 3,335 crore since the last disclosure on September 15, 2023. These orders include AMC for the AEW&C system (Airborne Early Warning and control), Uncooled TI sights, Software Radios, SWIR payload, AMC for IACCS, Passive Night Vision Binoculars etc.

Together, BEL has bagged new orders worth Rs 3,915 crore since September 15th.

With that being said, BEL's total received orders in the current financial year 2023-24 is at a staggering Rs 18,298 crore.

All the equipment manufactured by BEL is part of the 'Aatmanirbhar Bharat' program, it added.

On Tuesday, BEL's share price ended at Rs 156.20 apiece, up by 2.80% on BSE. Its market cap stood at Rs 1,14,178.75 crore. BEL touched a new 52-week high of Rs 157.15 apiece during trading hours, which is just a few paisas away from hitting a 52-week high of Rs 157.40 apiece.

Established in 1954, BEL engages in the manufacturing of specialised electronic equipment requirements of the Indian Defence Services. BEL produces a wide range of equipment for areas such as defence communication, radars, naval systems, c4i systems, weapon systems, homeland security, telecom & broadcast systems, electronic warfare, tank electronics, electro-optics, professional electronic components and solar photovoltaic systems.

Year-to-date, BEL shares have zoomed by nearly 56% on BSE. In a year, the upside is nearly 48%. This is far better returns than benchmarks Sensex and Nifty, and also many traditional schemes like fixed deposits.

This Navratna Defence PSU has declared a total of 180% dividends aggregating to Rs 1.8 per share for FY23. The dividend was announced in series of Rs 0.6 each or 60% in January, March, and May. In Trendlyne's list, BEL tops the chart with a 1-year average dividend yield of 1.28%, while 2-year and 5-year average yield is at 1.18% and 0.95% respectively.

The company has achieved a Turnover of Rs 7364.82 crore, registering a growth of 5.82% during the 1st half of FY 2023-24 over the Turnover of Rs 6,959.78 crore recorded in the corresponding period of the previous year. During the 2nd Quarter of FY 2023-24, BEL achieved a Turnover of Rs. 3918.13 crore as against Rs. 3896.20 crore recorded in the corresponding period of the previous year.

Also, in H1FY24, PAT stood at Rs 1343.18 crore, with a growth of 28.84% YoY. While in Q2FY24, PAT was at Rs 812.34 crore as against Rs 611.05 crore recorded in the corresponding period of the previous year.

BEL's share price has already surpassed many brokerages' target price as of now. Earlier in November Geojit in its report said, "During Q2FY24, BEL's order inflow surged by 10x YoY to Rs. 7,290cr, exceeding our estimates. The total order inflow for H1FY24 is approximately 70% of the total order inflow guidance of + Rs.20,000cr for FY24. Q2FY24 end order backlog is at Rs. 65,356cr, 3.8x FY23 sales, ensuring robust visibility for the next 3-4 years. In the near future, management anticipates some large orders, like long-term fuse orders ~Rs 4,000cr, EWC for ships Rs 2,000, battle tank upgrades ~Rs 3,000cr, and NGOPV Rs 2,500cr. Further, order pipeline visibility is expected to improve significantly, driven by high-value projects like QRSAM, MRSAM, and LARSAM, which are expected to take order backlogs to upwards of Rs.80,000cr over the next couple of years.."

Geojit's note also said on BEL, "We expect revenue to grow at a 15% CAGR over FY23-25E. We anticipate that the EBITDA margin will be in the range of ~23% in FY24-25E, owing to higher indigenous content and scale benefits. We expect PAT to grow at a 15% CAGR over FY23-25E."

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