Defence PSU giant, Bharat Electronics (BEL) witnessed heavy buying sentiment during the trading week from January 13th to 17th, rising by more than 5% on NSE. BEL is a top pick of brokerage Motilal Oswal. The brokerage believes BEL is well equipped to benefit from defense ordering, and hence it remains to be positive on the company. However, Motilal has tweaked its target price on BEL to Rs 360.
Bharat Electronics (BEL) Share Price:
Last week, on January 17th, BEL share price was at Rs 281.95 apiece, up by 2.10% on NSE with market cap of Rs 2,06,099.21 crore. BEL shares recorded latest weekly gains of 5.3%. However, year-to-date, the stock is down by 4.07%.
On year-on-year basis, BEL shares surged by 47%. In the long-term, BEL stock skyrocketed by 679%. BEL's all-time gains are at 128,059.09%, making it one of the best performing defence stock. Once upon a time, BEL stock was at Rs 0.22 apiece on January 1, 1999.
The stock's 52-week high and low is at Rs 340.50 apiece and Rs 171.75 apiece respectively.
So far, BEL has rewarded investors with hefty bonus issue, stock splits and dividends.
Dividends: Since August 2001, the company has delivered 51 dividends, as per Trendlyne. In the last 12 months, the company paid about Rs 2.20 per share dividend. Currently, the dividend yield is at 0.78%.
Stock Splits: BEL stock price has split only once and in the ratio of 1:10. The first ever stock split was carried out in March 2017, where its face value of Rs 10 each was trimmed to Re 1 each.
Bonus Issue: BEL has paid three bonuses so far. The first bonus issue was of 2:1 in September 2015, while the second bonus was 1:10 and took place in September 2017. The last bonus issue was of 2:10 and it took place in September 2022.
Motilal Oswal On BEL Stock:
In its research report, Motilal said, "We continue to remain positive on Bharat Electronics (BEL) given 1) its market leadership in defence electronics and ability to benefit from defence indigenization as well as from the upcoming large defence platform orders (QRSAM, MRSAM, Tejas Mk1A, naval platforms, etc.), 2) a strong order book of INR746b as of 2QFY25-end, providing healthy visibility on revenue, 3) stable margins and control over working capital, and 4) healthy return ratios."
"Despite BEL's overall FY25YTD orders of INR103b being lower than last year's, we expect the company to gain from the further ramp-up in defence orders in the coming months. The recent DAC approvals augur well for the sector and emphasize the government's focus on defence indigenization. The company is continuously expanding its presence across new areas via its SBUs. It is also focusing on improving the share of exports and non-defence projects in the overall order book," the brokerage added.
Lastly, Motilal said. "We tweak our estimates to bake in slightly lower ordering estimates and roll forward our TP to 35x Mar'27 estimates. Reiterate BUY with a TP of INR360."
BEL is a market leader in the highly specialized defence electronics market with nearly 60% share. In the overall defence market, the company has consistently improved its revenue market share over the last four years, reaching 12.8% in FY24.
Motilal said this was led by the government's continued focus on defence indigenization and BEL's focus on the Ministry of Defence (MoD)'s Make-I, Make-II, and Make-III projects involving indigenous solution development, with emphasis on systems, sub-systems, and services.
"With various large platform orders likely to be finalized over the next 1-3 years (Ref Exhibit 3), we expect defense PSUs to garner a larger share of ordering, and within that we expect BEL to benefit from the increased scope of its offerings via indigenization," it said.
Thus, Motilal expects BEL's market share to continue growing in the coming years and anticipate that it will clock faster growth than the growth in capex in the defense market.
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