3 Bonus, 1:10 Split, 70% Dividend Payout: Defence PSU BEL Hits New 52-Week High; Buy For Rs 260 Target

Defence PSU major, Bharat Electronics with Navratna status, has been hitting new 52-week highs this week. On Wednesday, BEL's share price started with gains as much as hitting a new 1-year high. BEL has achieved a record turnover of Rs 19,700 crore for FY24. And brokerages are optimistic about the growth prospects of BEL going forward. Jefferies is the latest to recommend buy for Rs 260 target.

In the opening bell of Wednesday, BEL touched a new 52-week high of Rs 229.50 apiece with a market cap of nearly Rs 1.67 lakh crore. That being said, multi-bagger BEL rose by a whopping 132% from its 52-week low of Rs 98.85 apiece.

BEL share prices have witnessed an upside broadly after its business update for FY24.

At the start of April month, BEL announced that during the Financial Year 2023-24, it registered a turnover of Rs 19,700 crore against the previous year's turnover of Rs 17,333 crore recording a growth of 13.65% YoY.

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.

As of April 1, 2024, BEL's total order book is of Rs 76,000 crore.

Jefferies expects a 2x times growth in domestic defence spending from FY24 to FY30, which will drive these defence players' stock prices. On BEL, Jefferies believes the company is well-placed to benefit from opportunities in the Indian defence segment, as its 70-75% revenue is shored up from the navy and army deals followed by air-force orders. Also, BEL is extra favourable due to its zero-debt and healthy working capital position.

Thereby, Jefferies has maintained BUY on BEL while raising its target price to Rs 260 per share from earlier Rs 225 per share. The outlook is positive.

Last month, BEL turned ex-dividend for a second interim dividend of Rs 0.70/- (70%) per equity share of Rs 1/- each fully paid up for the financial year 2023-24. For FY24, BEL earlier paid its first interim dividend of also Rs 0.70 apiece or 70%. Meanwhile, in FY23, the payout was 180% amounting to Rs 1.8% per share. On the current market price, BEL has a dividend yield of 0.95%. As per Trendlyne data, BEL has delivered up to 50 dividends since August 2001. Among other corporate affairs, BEL has also paid 3 bonuses and once carried a stock split for investors.

In the case of stock split issues, 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. But, BEL is a bonus shares rewarder!

Meanwhile, related to bonuses, BEL has paid three bonuses to its shareholders since 2015. 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.

Bharat Electronics (BEL) is a leading aerospace and defence electronics company. It primarily manufactures advanced electronics products.

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.