Prabhudas Lilladher Gives Buy Rating To This Navratna PSU Stock For 19% Return, Target Price Rs 125

Prabhudas Lilladher has assigned buy rating to Navratna PSU stock Bharat Electronics Ltd with a target price of Rs 125. If you buy the stock now at its current market price of Rs 105, you will get a potential return of 19%. EBITDA margins for H1FY23 came in at 19.4% vs 17.4% in H1FY22, owing to better absorption of fixed overheads. Check key takeaways below:

1. Bharat Electronics Ltd Stock Outlook

The last trading price of the stock is Rs 105 apiece with 52-week high at Rs 115 and 52-week low at Rs 61 apiece, respectively. The stock has given a return of 170% in last 3-years and 57% in last 1-year. The company has a market capitalisation of Rs 77,008.52 crore.

2. Bharat Electronics Ltd EBITDA margin improves in H1FY23

Standalone revenue grew ~7.8% YoY to Rs~39.5bn (PLe ~Rs40.5bn), led by healthy order book execution in Q2FY23. EBITDA came in at Rs8.6bn (flat YoY) (PLe ~Rs8.5bn), while EBITDA margins declined 171bps YoY to 21.7% in Q2FY23, owing to higher employee cost (up 11.8% YoY) and other expenses (up 25.2% YoY). PAT came in at Rs6.1bn, flat YoY (PLe ~Rs6.2bn).

3. Healthy Order Book

Order book stands healthy at Rs528bn, 3.1x TTM revenue (down 3.4% YoY) providing revenue visibility for next couple of years. Implied order inflows during the quarter came in at Rs13.6bn.

Valuation

According to Prabhudas Liiladher, "We remain positive on long term growth story of BEL given 1) its strong order backlog & order pipeline 2) recent MoU in hydrogen fuel cell, 4) diversification in newer business verticals like, medical equipment's, hydrogen fuel cell, EV batteries etc., 5) focus on export markets and 6) government focus on product indigenization etc. We expect BEL to report revenue and PAT CAGR of 16.6%/19.1% from FY22 to FY25E. The stock is currently trading at PE of 27.5x/23x/19.8x FY23/24/25E. We maintain 'BUY' rating on stock with TP of Rs125 (same as earlier) valuing it at 23x FY25E EPS."

Disclaimer

The stock has been picked from the brokerage report of Prabhudas Lilladher. 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 check with certified experts before taking any investment decision.