Stock to buy: Bharat Electronics is Anand Rathi’s Value Pick; sees 25% upside potential
Bharat Electronics shares with a target price of ₹250 apiece, implying an upside of over 25% from Tuesday’s closing price. “We expect Bharat Electronics (BEL) to see strong growth going forward due to many factors such as: 1) Moving towards self-reliance in defence, 2) Robust pipeline and focus of exports by GOI 3) Strong order inflow to drive the revenue growth and 4) Healthy profitability and return indicators," Anand Rathi analyst Manan Goyal said in a report. The defence PSU has been focusing on cost control and indigenization to improve profitability.
It has been maintaining the ratio of current assets to current liabilities remains at around 1.5. Its financial profile remains strong because of healthy profitability and return indicators, zero debt, superior liquidity and strong debt coverage metrics, as per the analyst. Also Read: Stocks to buy: Mahanagar Gas, Va Tech Wabag, Aditya Birla Sun Life, among six fundamental stock picks by HDFC Securities BEL’s strategic focus has been on implementing stringent cost-control initiatives and ramping up efforts toward indigenization to enhance overall profitability.
These endeavors are poised to potentially enable BEL to meet its margin targets effectively. In FY24, BEL witnessed robust order inflows that exceeded its initial guidance of ₹20,000 crore for the fiscal year. It has already received 26,760 crore of orders till December and still expects more orders to come.
The brokerage firm anticipates the order inflow to reach ₹30,000 crore in FY24. “Factors that will drive further order intake in FY25-26 include the Shakti system which is the EW system in the pipeline. Next year both the Air Force and army are working on making QRSAM which is likely to materialize.
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