136,559% Returns, 1:10 Split, 80% Dividend: BUY Zero-Debt Defence PSU Stock For 30% Strong Gains, TP Rs 390

Defence PSU stock Bharat Electronics (BEL) is recommended to buy on August 8, when RBI will announce its bi-monthly monetary policy outcomes. After sharp volatility, this zero-debt stock has witnessed heavy buying and soared by 5% on Wednesday on the NSE. BEL has rewarded its investors not only with massive gains in the long term, but also with corporate rewards like stock splits, bonus issues, and dividends. All-time gains of BEL is a whopping 136,560%.

There is an opportunity to not just fetch intraday gains in BEL, but it has the potential of strong gains of up to 30% shortly as well with the highest target of Rs 390.

BEL Share Price:

After market hours of August 7th, BEL stock stood at Rs 300.65 apiece, up by 4.7% on NSE with a market cap of Rs 2,19,768.50 crore. BEL's 52-week high and low are at Rs 340.50 and Rs 126.60 apiece respectively.

YTD, BEL stock has zoomed by nearly 62.6%. While in a year, the gain is around 133%. BEL's 5-year performance is also robust with a surge of nearly 824%. But its all-time return is a breathtaking 136,559.09%. BEL stock was merely at Rs 0.22 apiece on NSE, 25 years ago, on January 1, 1999.

BUY BEL Share Price:

Shiju Koothupalakkal - Technical Analyst at Prabhudas Lilladher has recommended BUY on BEL stock price on August 8 for an intraday target of Rs 317 with a stop loss of Rs 392 apiece.

As per Trendlyne data, the consensus recommendation from 26 analysts for Bharat Electronics Ltd. is BUY. EPS is expected to grow by 16.5% in FY25. The 1-year average target price in BEL is set at Rs 330.58 apiece, hinting at over 10% potential upside ahead.

At the latest, the highest target price in BEL is Rs 390, which signals a 30% potential upside ahead. This is set by brokerage ICICI Direct.

In its note, ICICI Direct said, "Healthy order-backlog, improving execution and robust pipeline provides strong visibility for future earnings growth. We expect revenue & PAT CAGR at ~16% & ~17% respectively over FY24-27E. Balance sheet remains strong with healthy returns ratios," adding, "We maintain BUY on BEL with a target price of ₹ 390 per share (based on 45x FY27E EPS)."

ICICI Direct highlighted two key factors as rationales for investment. These are:

- BEL's order pipeline remains robust in defence electronics (which includes electronic warfare, radars, communication & control systems, navigation systems, avionics etc for various platforms like fighter jets, warships, missiles, unmanned Ariel vehicles), non-defence and exports. The company maintains its order inflow guidance of ₹ 25000 crore annually in FY25E & FY26E. Additionally, the large order of QRSAM (₹ 25000+ crore) is also expected to be placed in FY26E.

- BEL is strongly positioned to capture the huge opportunity in the defence & space electronics systems/sub-systems industry. As per the industry reports, the share of defence electronics (in total defence production) is expected to increase to ~35% in the coming years (vs. current share of ~25%). With the focus on increasing capital outlay for indigenised systems or increasing indigenisation level across platforms, BEL is expected to be the key beneficiary in this impending opportunity considering its strong capabilities in designing, developing & manufacturing a wide range of strategic electronic products/systems.

Further, Prabhudas Lilladher has set a long-term target of Rs 341 on BSE, hinting at a 14% rise ahead. Additionally, brokerage Motilal Oswal recommends BUY for the target of Rs 360 on BEL, which would mean nearly 20% potential upside.

Going ahead, 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 soon.

Apart from being a top dividend-paying defence stock, BEL also 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 has achieved a Turnover of Rs. 4,105.14 crore, registering a growth of 19.10% during the 1st Quarter of FY 2024-25 over the Turnover of Rs. 3,446.69 crore recorded in the corresponding period of the previous year.

As of July 1, 2024, BEL's order book position is at Rs 76,705 crore.