Buy Defense PSU Stock For 24% Gains, Board Recommends Final & Interim Dividend: ICICI Direct

Broking firm ICICI Direct initiates a Buy on Bharat Electronics Ltd. (BEL) with a target price of Rs. 135 apiece. The stock has the potential to give up to 24% decent returns considering the given target price if purchased at the current market price.

The Board has recommended a Final and Sector dividend for the financial year ended 31st March 2023. It is a large cap PSU stock operating in the Defence sector. It has a market valuation of Rs. 80,115.18 crore.

Recommended Final Dividend

According to a regulatory filing by the Board of Directors on 17 May 2023, "In continuation to our earlier letter dated 2nd March, 2023 we wish to inform you that Board of Directors of the Company at its meeting held on 17th March, 2023, inter alia, has declared second interim dividend of Rs 0.60/- (60%) per equity share of Rs 1/- each fully paid-up for the financial year 2022-23. The second interim dividend will be paid within 30 days from the date of declaration."

Recommended Interim Second Dividend

According to a regulatory filing by the Board of Directors on 20 May 2023, "The Board of Directors of the Company at their meeting held on 20th May, 2023, inter alia, has recommended a final dividend of? 0.60 /- per equity share (60 %) of Rs 1/- each fully paid-up for the financial year 2022-23 subject to approval by the shareholders in the next Annual General Meeting of the Company."

Q4FY23 Results

According to the ICICI Direct, Revenues came in line with estimates; lower-than-expected raw material costs improved margins. "Revenue increased 2.1% YoY (up 56.3% QoQ) to Rs. 6456.6 crore; largely inline with estimates. EBITDA margin improved 347 bps YoY (up 760 bps QoQ) to 28.3%; better than our estimate of 24.5%. This was primarily on account of lower-than expected raw material cost. PAT increased 19.6% YoY (up 128% QoQ) to Rs. 1365.4 crore against our estimate of Rs. 1137.7 crore; primarily due to better-than-expected margins. The order backlog was at Rs. 60690 crore as of March 2023 end (3.4x FY23 revenues). Implied order inflows were at Rs. 20600 crore during FY23," the brokerage has said.

Buy for a Target Price of Rs. 135/share

According to the brokerage, Overall, expected double digit revenue, order inflow growth, sustained margins and strong order book to ensure a better performance. "We remain long term positive and retain our BUY rating on the stock. We value BEL at Rs. 135 i.e. 25x P/E on FY25E EPS," the brokerage has said.

Stock Outlook - Current Market Price & Returns

The stock of BEL last traded at Rs. 109.60 apiece, up 0.74% from its previous close of Rs. 108.80 apiece. Its 52 week high is Rs. 114.65 apiece and 52 week low is Rs. 73.03 apiece, respectively.

The stock jumped 1.67% in 1 week. It has given 8.35% in 1 month and 14.94% in 3 months, respectively. It has given 45.26% positive return in 1 year. It gave 421.49% multibagger return in 3 years. In 5 years, it has given 177.59% return.

About - Bharat Electronics Ltd. (BEL)

Bharat Electronics (BEL) is a leading aerospace and defence electronics company. It primarily manufactures advanced electronics products. Multi-product, multi-technology - diverse product range including radar, missile systems, electronic warfare & avionics, anti-submarine warfare, electro-optics, homeland security, civilian products, etc. Focus to increase the non-defence share to 20% over two to three years.

Disclaimer - The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.