BEML shares hits all-time high on bagging order from BMRC

Snapping a three-session losing streak, Bharat Earth Movers Limited (BEML) shares gained over 6% to hit a fresh record high in opening trade on Tuesday after the state-owned company secured a contract worth ₹3,177 crore from Bangalore Metro Rail Corporation (BMRC). The PSU stock has fallen 2.5% in three sessions since August 3.  The company is scheduled to release its June quarter earnings report on August 11, 2023.

“BEML Limited has secured the Letter of Acceptance from Bangalore Metro Rail Corporation (BMRC) for supply of Rolling stock contract 5RS-DM valued at approximately ₹3,177 crore,” it said in a BSE filing on Monday.

In May 2023, BEML emerged as the lowest bidder to supply 318 coaches for Bengaluru Metro's Phase 2, Phase 2A, and Phase 2B corridors. However, there was a delay in issuing the Letter of Acceptance (LoA) from BMRC.

Boosted by the development, BEML shares opened 5.3% higher at ₹2,108.85 against the previous closing price of ₹2,002.40 on the BSE. In the early trade so far, the smallcap stock gained as much as 6.5% to touch a new all-time high of ₹2,132, while the market capitalisation increased to ₹8,695 crore.

BEML's share price has risen nearly doubled from its 52-week low of ₹1,129.10 touched on March 16, 2023. In the last year, the stock has delivered a 42% return to its shareholders, while it added 37% in the calendar year 2023. In the past six months, the counter surged 50%, while it gained 33% in a month and 6% in a week.

Incorporated in 1964, BEML caters to three business segments - defence and aerospace, mining and construction, and railway and metro trains. It manufactures heavy earthmoving equipment for the mining and construction industry, vehicles for defense forces, and coaches for the metro and Indian Railways.

The recent rally in BEML shares can be attributed to order inflow owing to an influx of opportunities in Vande Bharat, metros, and defence vehicles. “BEML’s growth outlook is positive given the government’s push on defence and railway capex; robust order pipeline; margin expansion via operating leverage; and debt-free balance sheet,” Prabhudas Lilladher said in a report released on June 27.

As per Prabhudas Lilladher's report, BEML’s management expects revenue to touch ₹4,500-5,000 crore in FY24, implying growth of 15-28% over FY23. This includes executable orders worth ₹3,200 crore from the FY23 closing order book, and new mining & construction orders worth up to ₹2,000 crore which will be executed in FY24 itself. Given the strong traction in defence and rail & metro orders over the next 2-3 years along with good opportunities in mining & construction exports, BEML is targeting revenue of ₹7,000 crore in FY26 (21.5% CAGR over FY23-26), it said.

As of June 30, 2023, BEML’s order book stood at ₹9,230 crore (rail & metro – ₹3,740 crore; defence – ₹4,030 crore; mining & construction – ₹1,460 crore). 

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