Rs 20.50 Dividend: Not BEL, Or IRFC, But Defence Railway PSU Stock Bags Rs 7,563 Cr Orders In 15 Days; Buy

Massive order deals has been signed by one PSU stock that is engaged in both defence and railway sector heavily. To be precisely, this PSU company bagged as much as Rs 7,563 crore worth new orders from three different clients in less than 15 days. Who is it? Neither the largecap defence PSU BEL or railway star IRFC, but instead a midcap defence railway PSU stock BEML. Following the huge order book, BEML stock price is recommended to BUY.

BEML Share Price:

At the time of writing, BEML stock price traded at Rs 4207.95 apiece, down by 0.75% on December 2nd, with market cap of Rs 17,523.80 crore. The stock's 52-week high and low is Rs 5,489.15 apiece and Rs 2,385.00 apiece respectively. The price-to-equity ratio is at 61.07x, while the return on equity is at 11.23%.

BEML New Orders:

The latest massive order was of Rs 3,658 crore which was awarded to BEML by Chennai Metro Rail for "Design, Manufacture, Supply, Testing, Commissioning, Training of Personnel and Comprehensive Maintenance Contract for Fifteen Years of Standard Gauge Metro Rolling Stock (Electrical Multiple Units) and Depot Machinery & Plant."

Secondly, BEML secured another contract worth Rs 2,501 crore from Chennai Metro Rail for the Design, Manufacture, Supply, Testing, Commissioning, and Training Of Personnel And a Comprehensive Maintenance Contract Of Fifteen Years Of Standard Gauge Metro Rolling Stock (Electrical Multiple Units) And Depot Machinery & Plant.

The third order was of Rs 246.78 crore from Central Coalfields Limited (CCL). The order entails the supply of 48 state-of-the-art BH60M Rear Dump Trucks, spares and consumables for 1+4 years and comprehensive after-sales service support.

BUY BEML Stock:

According to Antique Stock Broking, BEML has bagged an order worth INR 36.6 bn helping bolster its order backlog to INR 151 bn+ and increasing the Railway and Metro segment contribution to 60% of the order book. The company has consistently increased its revenue from the Railway & Metro and Defence businesses, while contribution from the weak-margin mining business has seen a decline from 49% in FY21 to 41% in FY24 which is further expected to decline to 30% in the medium term as contribution from Railway & Metro and Defence segments are expected to reach 70% given that +90% of the order book contribution is from these two segments.

The broker believes that BEML with its market leadership position in the mobility segment (metro coaches, mining equipment, and defence mobility vehicles) is well placed to tap into the upcoming business opportunities in the Railway & Metro and Defence sectors which should
help it deliver a revenue CAGR of 18% and an earnings CAGR of 37% over FY24-27E.

Hence, Antique added,"We retain our positive stance on the company and BUY rating on the stock with a TP of INR 5,185 valuing the company at 30x its FY27E EPS."

The company has a strong track record of dividend payouts. As per Trendlyne data, the company delivered up to 34 dividends since August 2001. In the past 12 months, the stock delivered up to Rs 20.50 dividend per share. Its dividend yield is currently at 0.54%.

About BEML:

BEML Limited is a leading multi-technology 'Schedule A' company under the Ministry of Defence, which plays a pivotal role in serving India's core sectors like Defence, Rail, Power, Mining and Construction by offering world-class products. BEML operates in three verticals viz. Defence & Aerospace, Mining & Construction and Rail & Metro and has state-of-the-art manufacturing facilities located at Bangalore, Kolar Gold Fields (KGF), Mysore, Palakkad, with having very strong R&D infrastructure and nationwide network of sales and services.