1:10 Split, 3 Bonus, 80% Dividend; Crorepati Defence PSU BEL Stock To Buy For Strong Gains; 132,877% Up So Far

Leading Navratna stock in the defence PSU segment, Bharat Electronics (BEL) has pulled back slightly from Rs 300 levels, making it an attractive bet to fetch strong returns ahead. BEL's growth outlook continues to remain strong, making it an investor's darling. With a Low PE of 53.6x and a higher Return On Equity (RoE) of over 24%, BEL stock is also set to reward investors with a final 80% dividend payout.

BEL's share price is currently at Rs 292.55 apiece, up by 1.2% on BSE with a market cap of Rs 2,13,847.58 crore. Earlier this week, BEL stock touched a new all-time high of Rs 303.20 apiece. BEL's price-to-equity ratio is at 53.59x, and RoE is at 24.4% currently. YTD, BEL is up by 58%, while in a year, the stock zoomed by 163%.

But BEL is a crorepati making stock. Its all-time gain is a massive 132,877.27% as of now. The stock was merely at Rs 0.22 apiece on January 1, 1999. If an investor bought BEL shares for Rs 15,000 in January 1999, he or she will have a corpus of Rs 1,99,46,590.5 or Rs 1.99 crore by now.

At the latest, BEL announced that it received orders worth Rs.1150 crore till date during the financial year 2024-25. The major orders include AMC of Akash Missile System, Combat Management System for Ships, Missile Fire Control System for ships, Laser Range Finders, Communication Network Centre etc.

The flow of strong orders and upcoming dividends is keeping investors enthusiastic about BEL shares. The outlook is robust ahead!

BEL Dividend:

BEL will be in focus as it is set to pay a Final Dividend of Rs.0.80 per Equity share (having a face value of Rs.1/- each). The record date for the final dividend is likely to be announced in June.

In 2024, BEL has delivered hefty dividends so far. BEL turned ex-dividend in March and February of 2024, for a dividend payout of 70% each valuing Rs 0.70 per share each, totalling 140% or Rs 1.4 per share so far in the current year.

Apart from dividends, BEL 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 Share 2024 Target Prices:

JM Financial On BEL:

We remain positive on BEL given the strong order backlog, strong revenue visibility, sustained steady margin profile, healthy order prospects, continuous focus on diversification & export markets and continued indigenisation push by GoI. We expect revenue and PAT CAGR of 20% and 20% over FY24 - FY26E. We maintain a BUY rating on the stock with a TP of INR 320 valuing it at PE of 40x FY26E (earlier 30x FY26E). Key Risk: Slowdown in government spending on defence, execution delay due to supply chain constraints.

Sharekhan On BEL:

Q4FY2024 reported a strong revenue of Rs. 8564 crore, a growth of 32% y-o-y. This quarter saw some benefit from the Rs. 400-500 crore revenue which spilled over from the previous quarter. OPM of 26.7% was higher than expected, helped by a strong gross margin of 48.5%. Operating profit grew by ~25% y-o-y to Rs. 2287crore, Net profit rose by ~30% y-o-y to Rs. 1797 crore, driven by strong operating performance and aided by higher other income, which grew by 241% y-o-y. Order backlog stood strong at Rs. 75,934 crore (up 25% y-o-y) led by a strong order inflow of 35,500 in FY24.

BEL has exceeded FY24 order intake guidance and the future order pipeline is also promising as orders worth Rs 65000 crore (including QRSAM) are to be awarded in the next two years.

We believe BEL would play a significant role in successfully implementing the government's Make in India and AtmaNirbhar Bharat initiatives as it is a key defence and aerospace player. After the strong performance in this quarter, we raise our earnings estimate by 16%/25% for FY25/26 respectively. Hence, we retain a Buy on the stock with a revised price target (PT) of Rs. 325. At CMP, the stock is trading at 45x/37x on FY25/26 earnings estimates.

In the fourth quarter, BEL's consolidated PAT stood at Rs 1,796.67 crore, as against Rs 1,382.01 crore in Q4FY23 and Rs 860.26 crore in Q3FY24. Consolidated revenue stood at Rs 8,564.08 crore, as against Rs 6479.12 crore in Q4FY23, and Rs 4,162.16 crore in Q3FY24.

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.