Shares of Bharat Electronics Ltd (BEL) hit a new high of 52 weeks on the National Stock Exchange on Thursday. Note that the stock has risen 13% in the last two trading days since the company announced its results for the quarter ended in March and the full year.
Not only are BEL’s figures for FY21 strong, but the company’s outlook for FY22 is also encouraging. For FY22, BEL intends to record 15-17% growth in turnover and its order intake guidance is set at ₹15,000-17,000 crores.
“It relies on the combination of 1. a sound ordering of weapon systems, 2. an increasing relevance of electronic warfare systems, 3. an opening up of the naval air equipment market thanks to the indigenization efforts of BEL and 4. support for non-defense areas, ”Kotak Institutional Equities analysts said in a June 23 report.
During FY21, BEL secured orders worth ₹15,000 crores. As of April 1, its order book position stood at ₹53,434 crore, which translates to a healthy standalone revenue of 3.9 times for fiscal 21. In addition, the company forecast a profit margin before interest, taxes, depreciation and amortization (Ebitda) of 20 at 22% for fiscal year 22. Note that the EBITDA margin for FY21 stood at 21.6%, representing an expansion of 150 basis points compared to FY20. A basis point is one hundredth of a percentage point. BEL’s revenues for fiscal year 21 increased by 9.6% compared to the previous year. If this had been a normal year, the company could have crossed double-digit growth of over 10% for fiscal 21, he said.
During the March quarter, strong execution and cost optimization measures allowed BEL’s EBITDA margin to increase by 300 basis points to 28.5%.
Investors took note of the company’s performance. After all, BEL stock significantly outperformed the Nifty 200 Index last year. The shares are now trading at around 17 times estimated earnings for fiscal 23, based on data from Bloomberg.
Most analysts remain positive on the title.
“In addition to gaining market share in the defense segment, the management is also diversifying into vertical sectors unrelated to defense, such as electric vehicles (electric vehicles), subways, electronic warfare, healthcare. , etc. 2-3 years, ”noted a report from Prabhudas Lilladher Pvt. Ltd.
On the other hand, new orders or lower than expected margins are key risks for the stock.
“Higher growth in non-defense business poses an upside risk to our earnings per share estimates, while deteriorating working capital is a major risk to valuations,” Motilal Oswal analysts said. Financial Services Ltd in a June 24 report.
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