Prabhudas Lilladher Places A “Buy” Call On The Stock Of These 2 Navratnas

Broking firm Prabhudas Lilladher has placed a buy call on the stock of two Navratna companies of Bharat Electronics and Engineers India. The brokerage sees good potential upside in both these 2 stocks.

Price target of Rs 125 on the stock of BEL

Prabhudas Lilladher has said that it remains positive on the stock of Bharat Electronics given its strong order backlog (Rs 528 bn as on Q2FY23, 3.1x TTM revenue), order pipeline, and diversification in non-defence segment such as medical equipments, hydrogen fuel cell, EV batteries etc. (revenue contribution to increase to 20% to 25% over the next two to three years, from ~10-12% currently), 4) recent MoU in hydrogen fuel cell and 5) government's thrust on defence product localization. "We expect BEL to report revenue and PAT CAGR of 16.6% and 19.1% between FY22-FY25E. We maintain 'BUY' rating with target of Rs 125 valuing it at PE of 23x FY25E EPS," the brokerage has said.

Engineers India

This Navratna company is another stock that the brokerage has a "buy" call on. "We expect overall revenue growth of 22%, factoring in ~54% contribution from Turnkey segment. Margins are expected to be impacted due to change in revenue mix. Order pipeline and update on hydrogen orders will be key monitorables," the brokerage has said. Prabhudas Lilladher has set a price target of Rs 89 on the stock of Engineers India. Apart from the stock of Engineers India and Bharat Electronics from the PSU space, the brokerage is also bullish on private capital Goods major L&T.

Target price of Rs 2384 on the stock of L&T

According to Prabhudas Lilladher, L&T is well-placed to benefit from overall diversified tender prospects with better order conversion in domestic market, significant traction in capex from oil exporting countries, mainly hydrocarbon segment and expected uptick in private capex. "We expect L&T to report revenue and PAT CAGR of 10.2% and 18.6% between FY22-FY25E. Maintain 'BUY' rating with a target price of Rs 2,384," on the stock the brokerage has said. According to Prabhudas Lilladher, product companies revenue to grow by 23.4% YoY (~24% YoY ex-BHEL) led by decent volume growth in domestic and export markets, along with likely price hike and favorable business mix. EBITDA margins for most product companies are likely to improve on back of price-pass through, softening commodity prices & freight cost and product mix.

Disclaimer

The stock have 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 consult with certified experts before making any investment decision.