137,700% All-Time Gains, 1:10 Split, 80% Dividend: Time To BUY Debt-Free Defence PSU Stock BEL On Dips?

Debt-free defence PSU giant company, Bharat Electronics (BEL) has corrected sharply in 30 days. Due to huge selling from July 29 to August 2nd, BEL stock price's month-on-month performance is down by nearly 4%, while its latest weekly drop is a little over 3% on NSE. Nonetheless, BEL continues to be a multi-bagger with all-time gains at eye-bulging 137,695.45%. BEL reported better-than-expected performance in Q1, and that has reiterated brokerages bullish optimism in the stock.

BEL Share Price:

The stock ended at Rs 303.15 apiece, down by 2.6% on NSE with a market cap of Rs 2,21,595.95 crore after a trading session of August 2nd. The stock is already 11% down from its 52-week high of Rs 340.50 apiece which was recorded on July 10, 2024, ahead of Budget.

Nevertheless, BEL's share price continues to trade more than double the amount of its 52-week low of Rs 123.50 apiece. YTD, BEL continues to be among the top bulls with gains of nearly 64%. In a year, BEL's share price has surged by over 143%, and its 5-yearly surge is by a massive 854%. But BEL shares all-time performance is a surge of 137,695.45%. BEL stock was merely at Rs 0.22 per share nearly 25 years ago, on January 1, 1999.

The price levels and gains are adjusted to BEL's corporate actions such as bonus issues, stock splits, and dividends.

BEL is yet 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.

While being among top dividend-paying defence stocks, 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 Q1 Results:

In Q1FY25, BEL registered a standalone net profit of Rs 776.14 crore, rising by a whopping 46% from a net profit of Rs 530.84 crore in the same period a year ago. Also, the defence PSU giant's revenue increased by 19.6% to Rs 4,198.77 crore in Q1FY25, compared to revenue of Rs 3,510.84 crore recorded in the same period last year.

However, BEL witnessed a decline in both PAT and revenue on a quarter-on-quarter basis. The company posted a massive 56.48% decline in Q1FY25 PAT as against Rs 1,783.5 crore in Q4FY24. Also, revenue decreased by 50.76% compared to revenue of Rs 8,528.54 crore logged in Q4 of FY24.

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.

BUY BEL Share Price?

Motilal Oswal On BEL Shares:

BHE's 1QFY25 results came ahead of estimates, driven by better-than-expected revenue and PAT. Revenue growth was led by a strong order book, which stood at INR767b. Order inflows stood at INR49.6b. The company has maintained its guidance on revenues and order inflows despite a strong execution in 1Q. We maintain our estimates and TP of INR360 on BHE with a BUY rating on the stock.

Choice Broking On BEL:

BEL is well positioned to gain from the growing list of Indigenization procurement and winning new order on defense electronics such as high end electronics related to defence, industrial and various civil projects. Despite trading at rich valuation, we continue to maintain our positive stance on the BEL due to its position as the sole supplier of various equipment and systems and ongoing innovation in diverse products from tri forces.

We have a positive outlook on BEL, supported by 1) BEL is the direct beneficiaries of GOI's self-reliance on defense sector,2) Rising defense spending across all segment (Naval, Army, Air Force), 3) Diversified business opportunities like Defence, Civil aerospace, Railway etc., 4) Focusing on system level integration, and strong order book. We maintain our rating "ADD" with a TP of Rs.346, valuing it on (45x of FY26E EPS) Assigning a higher multiple on account of promising domestic defence manufacturing opportunities and increasing gamut of ToT.

Prabhudas Lilladher On BEL:

We remain positive on BEL's long-term growth story given 1) robust order backlog & pipeline driven by government's push on indigenization in defense, 2) diversification into non-defense verticals like metros, civil aviation, IT infra, etc. 3) strong balance sheet, cash flow generation, & return ratios, and 4) heathy margin improvement. The stock is currently trading at a P/E of 51.1x/42.5x FY25/26E. We value the stock at a P/E of 45x FY26E (40x FY26E earlier) owing to a strong order pipeline and improving margin profile. Upgrade to 'Accumulate'.

JM Financial On BEL:

We remain positive on BEL given strong order backlog, strong revenue visibility, sustained steady margin profile, healthy order prospects, continuous focus on diversification & exports markets and continued indigenisation push by GoI. We have assumed order inflows of INR 700bn for FY25 and FY26 combined, vs management guidance of INR 750bn (excl. QRSAM INR 500bn guidance). Factoring this, we expect revenue and PAT CAGR of 20% over FY24 - FY26E. We maintain BUY rating on stock with TP of INR 360 valuing it at PE of 45x FY26E (earlier 40x FY26E), factoring in strong order pipeline and defence outlook.

Global Brokerages On BEL:

Leading global brokerage Morgan Stanley has maintained overweight on BEL while raising its target price to Rs 375 per share with positive outlook. Also, Jefferies has maintained BUY on BEL while raising its target price to Rs 370 per share with positive outlook.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor 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.