Bharat Electronics Vs Bharat Dynamics: Stock Splits, Bonus Issues, Dividends, Which Defence Stock To Buy?

Two of the leading defence PSU stocks, Bharat Electronics (BEL) and Bharat Dynamics have witnessed quite an action on BSE and NSE. Both have traded to new all-time highs and registered their fair share of pullbacks. So far in 2024, both stocks have given double-digit returns, and both have healthy returns on equity. So which defence stock should you buy still?

Before getting into details, let's dive into BEL and BDL's fundamentals, technical, corporate actions and earnings.

Bharat Dynamics (BDL):

Share Price: BDL share price traded at Rs 1433.35 apiece, up by 0.80% on BSE with a market cap of Rs 52,541.24 crore. YTD, the stock jumped by 66%. In a year, stock surged by 151%.

Bonus Shares: BDL has not issued any bonus shares.

Stock Split: However, the stock recently split into a 1:2 ratio, meaning its face value of Rs 10 each for equity shares split into two to the face value of Rs 5 each with effect from May 24, 2024.

Dividend: Meanwhile, the stock has declared up to 12 dividends since September 2018. The upcoming final dividend payout is of Rs 0.85 per share (face value of Rs.5/-each) for FY24. For overall FY24, the company's dividend will be Rs 9.7 per share in FY24.

Earnings: FY24 revenue stood at Rs 2,369.27 crore, down from Rs 2,489.39 crore in FY23. On the other hand, FY24 PAT was at Rs 612.72 crore versus Rs 352.17 crore in FY23.

Fundamentals, Technical analysis: In the fundamentals, the stock's price-to-equity ratio is at 42.54%, while the return on equity comes around 16.85%. Among the technical, as per Trendline, the stock has 4 bullish and 1 bearish candle active, while it is trading above 7 out of 8 SMAs, and above 4 out of 9 Oscillators in the bullish zone.

BUY/SELL? In its latest research report, Choice Broking said, "BDL is a part of the Premier Organisation of GOI, with its over five decades of missile and countermeasure systems in defence equipment manufacturing experience. Under its diversification program, BDL is poised to enter into the manufacturing of a wide variety of weapons/systems in defensive and offensive platforms."

Further, the brokerage added, "We like to ascribe a "BUY" rating due to the expensive valuation of the stock with a target price of Rs 1,560 (60x of FY26E EPS)."

Bharat Electronics (BEL):

Share Price: BEL is among the leading defence stocks. It is currently trading at Rs 291.30 apiece up by 1.80% on June 12 with a market cap of Rs 2,12,933.86 crore. The stock's 52-week high and low are at Rs 323 apiece and Rs 117.95 apiece respectively. YTD, the stock is up by 57%. In a year, the stock rallied by 144.08%.

Bonus Issue: So far, the stock distributed three bonus shares in less than a decade. BEL rewarded investors with a bonus issue of 2:1 in September 2022. Before this, the company paid up to a 1:10 bonus share in September 2017 and another 2:1 in September 2015.

Stock Split: The only time BEL stock was sub-divided was in March 2017 in the ratio of 10:1. 1 equity share having a face value of Rs 10 each was split into ten equity shares with a face value of Rs 1 each.

Dividend: Since August 2001, the company delivered up to 50 dividends, as per Trendlyne data. The company has recommended a final dividend of Rs 0.80 per share for FY24, which will be the third payout in 2024 so far. BEL has delivered hefty dividends so far. BEL turned ex-dividend in March and February of 2024, for a dividend payout of 70% each valuing Rs 0.70 per share each, totalling 140% or Rs 1.4 per share so far in the current year.

Earnings: FY24 revenue came in at Rs 20,268.24 crore versus Rs 17.734.44 crore in FY23. While PAT stood at Rs 3,985.24 crore in FY24, compared to Rs 2,986.24 crore in FY23.

Fundamentals, Technical Analysis: As per data on BSE, BEL's stock has a price-to-equity ratio of 52.03x, while its return on equity was 25%. Among the technical, the Trendlyne data revealed that BEL stock has 3 bullish and 1 bearish candle active, is trading above 8 out of 8 SMAs, and is also above 5 out of 9 Oscillators in the bullish zone.

BUY/SELL? ICICI Direct has set the highest target in BEL stock. In its note, the brokerage said, "Healthy order-backlog & robust pipeline provides 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. We expect revenue & PAT to grow at a CAGR of 15% & 15.5%, respectively over FY24-26E. Balance sheet remains strong with healthy returns ratios."

Further, ICICI Direct's note said, "We recommend BUY on BEL with a target price of ₹ 330 per share (based on 45x FY26E EPS)."

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.