1:10 Split, 3 Bonus, 70% Dividend: Defence PSU Fundamentally Strong Pick; Anand Rathi Sets Highest Rs 250 TP

PSU giant in the aeropace and defence segment, Bharat Electronics is a fundamentally strong pick in FY25 due to rising demand in electronics engineering. BEL has a robust pipeline and the growth trajectory looks healthy, thereby, Anand Rathi recommends buying. The brokerage has set the highest target price of Rs 250 on BEL which is already a multibagger.

Bharat Electronics Share Price:

The defence heavyweight stock ended its FY24 year above the Rs 200 mark. On March 28, the stock stood at Rs 201.45 apiece, up by 0.90% on BSE with a market cap of Rs 1,47,255.49 crore.

The aerospace and defence stock is very close to its 52-week high, and while it trades higher by 124% from its 52-week low of Rs 89.93 apiece.

Bharat Electronics Share Price Target:

Giving its fundamental views, Anand Rathi's research report said, "India is increasingly asserting itself on the global stage, positioning as a dependable and credible provider of defence equipment and sophisticated electronics. BEL is steadily cementing its position as a leading global player in the field of electronics engineering. Fueled by its extensive proficiency in electronics and software, coupled with an unwavering commitment to innovation, BEL has remained at the forefront of equipping their nation's defence forces with pioneering solutions."

Moreover, the brokerage pointed out that the company is harnessing this expertise to expand its horizons, branching out into the development of comprehensive solutions spanning various disciplines for both civilian and international markets.

Further, Anand Rathi's notes said, "We expect BEL to see strong growth going forward due to many factors such as: 1) Moving towards self-reliance in defence, 2) Robust pipeline and focus of exports by GOI 3) Strong order inflow to drive the revenue growth 4) Healthy profitability and return indicators. We re-initiate a 'BUY' coverage with a target price of Rs 250."

BEL, a prestigious Defense Public Sector Undertaking (DPSU), was founded in 1954 under the aegis of the Government of India's Ministry of Defence, with a primary objective of fulfilling the electronic equipment necessities of the defence sector. Holding the majority ownership stake of 51.14%, the Government of India maintains its position as BEL's principal shareholder. Recognized as a Navratna PSU in June 2007, BEL stands as a key supplier of cutting-edge radar, communication, and electronic warfare systems to the Indian armed forces.

In the non-defence business segment, the company is into areas such as Homeland Security & Smart Cities, Solar, Satellite Integration & Space Electronics, Transportation Solutions (Railways/Metro, AAI, etc), Artificial Intelligence, Cyber Security, Software as a Service, Energy Storage Products and Electronic Voting Machines (EVMs), besides Composite Shelters & Masts.

Over the years, BEL has marked numerous significant achievements. A prime illustration of BEL's commitment to indigenous innovation is evident in the Akash Air Defence Weapon System, showcasing its prowess in design, development, and manufacturing. Additionally, the Coastal Surveillance System, tailored to bolster surveillance along India's extensive coastline spanning over 7,500 kilometres, is now being extended to allied nations. Advancements in radar technology, including the integration of the Weapon Locating Radar and 3D Tactical Control Radar, underscore BEL's significant strides in this domain, the brokerage cited.

BEL Dividend, Bonuses, Sub-Division:

Dividend: This week, BEL shares turned ex-dividend on March 23, 2024, for its second interim dividend of Rs 0.70/- (70%) per equity share of Rs 1/- each fully paid up for the financial year 2023-24. The second interim dividend will be paid within 30 days from the date of declaration.

For FY24, BEL earlier paid its first interim dividend of also Rs 0.70 apiece or 70%. Meanwhile, in FY23, the payout was 180% amounting to Rs 1.8% per share. On the current market price, BEL has a dividend yield of 0.95%. As per Trendlyne data, BEL has delivered up to 50 dividends since August 2001. Among other corporate affairs, BEL has also paid 3 bonuses and once carried a stock split for investors.

Stock Split: 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. But, BEL is a bonus shares rewarder!

Bonus Shares: In a decade, BEL has paid three bonuses to its shareholders since 2015. 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.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, 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.