Bharat Electronics Ltd share rose 5.97% to INR 274.25

Bharat Electronics Ltd share rose 5.97% to INR 274.25

Gross profit margin has remained strong for BEL since the past three quarters

Analysts mentioned that BEL has delivered strong gross profit margins consistently in the last three consecutive quarters, driven by better job mix and operational efficiencies, even as spending on ‘Buy’ categories remained high.

Aerospace and defence electronics stock BEL jumped 9.25 percent to quote at Rs 282.80. This defence multi-bagger stock has gained 154 percent in the last one year.

For the March quarter, Nomura India said, other expense saves offset lower employee costs, resulting in an EBITDA margin of 26.7 per cent—Nomura estimate is 23.7 per cent and consensus is at 23.8 per cent.

Nomura India said, ‘Annual growth of 225 percent in other income also contributed to beating Nomura/consensus estimates by 17 percent/21 percent. Overall, we still remain positive on BEL as we go forward, as we expect it’s disciplined growth, its market leadership coupled with increasing project sizes as value chain progression as system integrator happens.’

It has estimated that BEL would exert a 16 per cent PAT CAGR for FY23F-FY26F and espoused a target price of Rs 300 for this defense stock, Nomura IndiaSAFE said.

Motilal Oswal said indigenization in the Indian defense sector is inching up and the market share would be at 12-13 per cent for BEL. It said the company was also making continuous efforts to grow communications business to boost non-defense revenue and factored in higher margins in its estimates.

We also raise the valuation multiple to 35x two-year forward earnings, and revise the target price to ₹310, upgrade the stock to Buy from Neutral,” Motilal Oswal added.