ICICI Securities Assigns Buy On Defence PSU Stock, Target Price Rs 150

ICICI Securities has come up with a 'Buy' on Bharat Electronics Ltd. (BEL) post the company gets won orders worth Rs 59 bn on Tuesday, June 20, 2023. The brokerage assigns Rs. 150 target price on the stock of BEL. Considering the given target price and the current market price of the stock, the stock is likely to give a decent return of 22%.

Bharat Electronics (BEL) receives orders worth Rs. 5900 Crore

According to a press release, "BEL received order for 2 Regiments of Improved Akash Weapon System (AWS) with upgrades from BDL for a value of Rs. 3914 Crore. Akash is an all-weather, point/area air-defence weapon system intended for defending vulnerable points/areas against threats emanating from low, medium and high altitudes. The system uses high mobility vehicles for mobile application."

Further, "Other significant orders received inter-alia include orders for Shakti EW & Sanket MK III (Naval Systems), GBMES & GBVU Com Jammer systems, MKBT systems, IFF-MKXII Crypto Modules & Up gradation of SDP & Display of Rohini Radar, Training system for CMS P15B & CAMC of CMS for P 28 etc."

Order inflow on expected lines

According to the Brokerage firm, Bharat Electronics (BEL) has won orders worth Rs59bn thus far in Q1FY24. This is in line with the management's guidance of Rs200bn of order inflow in FY24 and implies orderbook at the end of Q1FY24 is likely to be higher compared to Q4FY23 level of Rs606.9bn. "We expect orders for fuses (for long-term requirement of Indian Army) and Naval platforms during the course of FY24," the brokerage has said.

It added, "In our view, with its finger in the pie in almost all the upcoming major orders over the next few years, BEL is the best play in defence space. We expect the execution of the recently won orders to commence from FY25, resulting in comfortable bill-to-book position in FY24. Taking cognisance of robust order inflow as well as book-to-bill position, we raise our P/E multiple to 27x (earlier 25x), corresponding to 3.5 deviations (earlier 3 deviations) above the past 10-year mean. We maintain BUY rating on BEL stock with a revised TP of Rs150 (earlier Rs140) and continue to recommend it as our top pick in defence space."

Stock Outlook

On Thursday, the shares of BEL ended at Rs. 123.45 apiece on BSE, down 0.53%. It traded the 52 week high on 16 June 2023 at Rs. 127.40 apiece, while the 52 week low on 6 July 2022 at Rs. 74.68 apiece.

The stock surged 1.23% in 1 week. It gave 11.77% positive return in a month and 33.24% in 3 months, respectively. It jumped 63.98% in 1 year. It jumped 355.54% in 3 years and 237.6% in 5 years, respectively.

Disclaimer - BEL recently receives orders worth Rs. 5900 Crore. Brokerage firm ICICI Securities assigns Buy on the stock. 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.