144,560% Up, 10:1 Split, 80% Dividend: Zero Debt Defence PSU Stock BEL Beats Nifty PSE By 40%; BUY OR SELL?

Zero-debt defence PSU stock, Bharat Electronics (BEL) is among the star performers of 2024, with the stock price currently just less than Rs 5 away from touching yet another all-time high. BEL is a crorepati-making stock with gains of more than 1,44,000% in the longest run. YTD, BEL is up by 72%, but it has already outrun Nifty PSE by nearly 40% in the current year. Defence stocks including BEL are likely to trend upward with huge project announcements and capital allocation by the government.

Riding on the back of bulls, BEL has outperformed both Sensex and Nifty. And that's not all, BEL also beats Nifty PSE index.

On NSE, BEL's share price stood at Rs 318.25 apiece with a market cap of Rs 2,32,633.71 crore. On June 18, the stock surged by nearly 3% after market hours.

The stock is near its 52-week high of Rs 323 apiece and has more than doubled from the 52-week low of Rs 117.90 apiece on the NSE. YTD, the upside is around 71.98%, while in a year, the stock rallied by 155%.All-time gains in BEL is of 144,559.09%. The stock was merely at Rs 0.22 per share on January 1, 1999.

As per Axis Securities, FII shareholding in Bharat Electronics Ltd has increased by 6.95% in the past 1 Year, despite MF shareholding decreasing by -10.03% in the past 1 Year.

On the screeners, analysts have been positive on BEL since April 2020, after the COVID-19 pandemic. The stock is still strongly undervalued. Also, Axis Securities data showed that in the last 1 year, Bharat Electronics Ltd has beaten the Nifty PSE by 39.7% (CAGR difference). Further, for 6 out of the Last 12 Months, i.e. 50% of the time it has beaten Index returns.

Among fundamentals, the brokerage's data revealed that in 4 out of the last 5 years, PAT Growth has been high. Meanwhile, 5 out of the last 5 years, the ROE has been high.

The latest uptrend in BEL is because the Defence Ministry aims to increase defence exports over time. In his second term as Defence Minister, Rajnath Singh announced a target of Rs 50,000 crore in exports of Indian defence equipment by 2028-2029. The minister has announced the government's determination to achieve self-reliance in defence manufacturing and modernisation of armed forces.

Coming to BEL, apart from giving double-to-triple digit returns, BEL is also going to reward investors with a final dividend of Rs 0.80 per share (having a face value of Rs.1/- each). The record date for the final dividend is likely to be announced soon.

Being a top-dividend-paying stock, BEL also has a track record of rewarding bonus shares and splits as well. In terms of bonus shares, 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.

In terms of stock splits, in 2017, 1 BEL share was split into ten smaller shares effective from March 16. The face value split from Rs 10 to Rs 1.

As per Trendlyne data, the consensus recommendation from 26 analysts for Bharat Electronics Ltd. is BUY. Of the total, 20 analysts have given a 'STRONG BUY' and 'BUY' call on BEL shares, while 3 have suggested HOLD, and 3 analysts recommend SELL. EPS is expected to grow by 13.4% in FY25.

The new all-time high target price on BEL is Rs 330 set by ICICI Direct with a BUY recommendation. Also, experts see BEL to even have the potential of touching the Rs 400 mark this year.

The reason why ICICI Direct is highly bullish on BEL is because the company's healthy order backlog & robust pipeline provide strong revenue visibility. Moreover, increasing indigenisation across defence platforms, focusing on cost-optimisation and increasing exports & services share would help in sustaining better margins in the coming periods.

BEL has received a positive outlook due to its strong order book. In FY24, the company successfully secured orders worth around Rs. 35000 crore. Among the notable defence orders obtained during the year were Electronic Fuzes, EW Systems, Communication Systems for naval warships, Fire Control Systems, Akash Prime Weapon Systems, Radars, Sonars, Software Defined Radios, Night Vision Devices, Tactical Communication Systems and other projects in Non-defence sector.

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.