Multibagger Navratna Stock Reports Healthy Q2 Earnings: Buy This Electronics Stock, Says Edelweiss

Top brokerage firm Edelweiss has given a buy rating to the stock of Bharat Electronics. The multibagger Navratna company's standalone net sales gained by 7.6% to Rs. 3,896.20 crore in Q2 FY 23 compared with Rs. 3,622.42 crore in the year-ago quarter. The company is now offering a 4.27% dividend yield.

Stock To Buy: Target Price

The Current Market Price (CMP) of Bharat Electronics is around Rs. 103. Edelweiss has estimated a Target Price for the stock at Rs. 114. This stock has the potential to give an 11% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 77,008 crore. In the last 6 months the share price has gained by 32.65%.

Stock Outlook
Current Market Price (CMP)	Rs. 103
Target Price	Rs. 114
Potential Upside	11.00%
52-week high share price	Rs. 114.65
52-week low share price	Rs. 61.15

Healthy Financials

In Q2 FY 23 Bharat Electronics reported a standalone net profit of Rs. 611.05 crore in Q2 FY23. Additionally, the PSU reported a profit before tax of Rs. 824.86 crore in Q2 FY23, which was Rs. 827.74 crore in the year-ago quarter. Bharat Electronics' total expenses increased by 10.26% YoY to Rs. 3,195.98 crore in Q2 FY23. Cost of material consumed also increased by 30.98% to Rs. 2254.45 crore.

Stock Upside: Edelweiss

According to Edelweiss, "With strong order book in hand and parallel execution capability for multiple platforms, BEL has a strong P/L growth visibility. Recently, BEL bagged order worth Rs. 80.6bn from Triton Electric Vehicle India Pvt Ltd. for supplying Li-Ion Battery Packs. We expect BEL's top-line growth to improve for FY23E-24E, given better new order growth in past two years & normalisation in supply chain."

Capital expenditure

BEL, one of India's largest defence public sector undertakings (PSU), specialises in manufacturing defence electronics. It is emerging as a key beneficiary of increase in defence capital expenditure. Rising local player allocation & GoI's focus on exports in defence are material growth tailwinds for the company. Also, with structural need to ensure higher systems availability and many more surface to air missile (SAMs) system requirements, BEL's order intake visibility remains high with limited headroom for competition.

Company Portfolio

Established by Government of India under the Ministry of Defence in 1954 to meet the specialised electronic needs of the Indian defence services, Bharat Electronics (BEL) has grown into a multi-product, multi-technology and multi-unit company, serving the needs of customers in diverse fields in India and abroad. BEL offers products and services in a wide spectrum of technology like radars, military communications, naval systems, electronic warfare systems, telecommunications, sound & vision broadcasting, opto-electronics, tank electronics, solar photovoltaic systems, embedded software & electronic components.

Disclaimer

The above stock was picked from the brokerage report of Edelweiss. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.