Shares of Bharat Electronics Limited (BEL) rallied over 9% to touch a new record high on Tuesday as investors cheered the state-owned company’s March quarter results. The brokerages remain bullish on the PSU defence stock, citing healthy order book and strong outlook amid continuous rise in share of indigenisation in the Indian defense sector.

Extending rally for the sixth straight session, BEL shares rose as much as 9.2% to touch a new all-time high of ₹282.80 in early trade today, while the market capitalisation rose to ₹2.02 lakh crore. The PSU stock has risen 26% in the past six sessions, while it has surged 163% against its 52-week low of ₹107.30 touched on May 24, 2023.

At the time of reporting, BEL shares were trading 7.36% higher at ₹277.90, with nearly 69 lakh shares changing hands over the counter as compared to two-week average volume of 21 lakh stocks. The counter has given 151% returns in the last one year, while it gained nearly 50% in the calendar year 2024. The stock has climbed 94% in six months and 19% in the last month.

Despite the recent rally, analysts remain positive on the stock, expecting an upward potential of 20% from the current market price (Friday closing price of ₹258.85).

Motilal Oswal has upgraded the stock to ‘BUY’ from ‘Neutral’ earlier, with an upward revision of the target price to ₹310 per share. “BEL Q4 FY24 results beat our estimates, driven by better-than-expected EBITDA margin and PAT and strong revenue growth. Upfronting of order inflows led to a beat in overall order inflows for the company,” it says in a latest report.

As per the brokerage, the share of indigenisation in the Indian defense sector has been continuously moving up and BEL’s revenue market share is expected to remain high at around 12-13%.

“The company is continuously taking initiatives to increase the share of exports and non-defense revenues. We incorporate higher margins and increase our estimates. We also increase the valuation multiple to account for a larger market share of BHE, benefits of technology tie-ups, MoUs, and an improving share of exports and non-defense in total revenues,” the report notes.

For the fourth quarter ended March 31, 2024, BEL reported a 30% growth in its consolidated net profit at ₹1,797 crore as compared to ₹1,382 crore in the year-ago period. Revenue from operations jumped 32% to ₹8,564 crore from ₹6,479 crore in the year ago period.

For the full year FY24, the navratna defence PSU achieved a turnover of ₹19,819.93 crore, up 14.35% against ₹17,333.37 crore recorded during the previous year. The order book stood at ₹75,934 crore as of April 1, 2024.

The board of the company also recommended a final dividend of ₹0.80 per share for the financial year 2023-24, subject to approval by the shareholders.

Motilal Oswal in its report says that Bharat Electronics successfully secured orders worth around ₹35,000 crore in FY24. The company has a market share of 12% in the overall defense market and a market share of nearly 60% in the highly specialised defense electronics segment.

Key defense orders were electronic fuses, EW systems, communication systems for naval warships, fire control systems, Akash prime weapon/system, radars, sonars, software defined radios, night vision devices, tactical communication systems, and other projects in the non-defense sector. As a result, the order book surged to ₹76,000 crore, which included export order book of $407 million (vs. $211 mn in FY23). The company achieved exports of $93m (up 92% YoY), including exports of key products such as transmit & receive (TR) modules, compact multi-purpose advanced stabilisation system (compass), radar & EW systems, medical electronics, communication equipment, etc.

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