BEML holds promise among PSU stake sale candidates

The government's plan for its biggest disinvestment drive might include the sale of its stake in 10 public-sector undertakings (PSUs).

The names that appear on the list include mostly unlisted players, except one that immediately draws attention -- Bharat Earth Movers Limited (BEML). 

BEML, a manufacturer of earth moving equipment, also caters to railway and defence sectors. Being the domestic leader in earth-moving equipment like dumpers and dozers, the company also has, with indigenisation efforts, proved itself by withstanding competition from global players in the Metro rail business. The prospects of the company remain strong, looking at the expected order flow from mining space, especially coal mining, given the pick-up in mining activities. Also, increased capex from railways and opportunities being offered from defence have been looked at by the Street with optimism.

While the company might have disappointed the Street with its first quarter performance -- and the stock price also corrected significantly in September -- the weakness in the first quarter was mainly led by delays in the Delhi Metro Phase-III orders and a delay in a couple of mining orders, impacting execution. These are likely to pick up, as the delayed supply of Delhi Metro phase-III coaches is expected to commence from third quarter, by when the delayed mining orders, too, are likely to start contributing. The opportunities from defence are strong. Analysts at Antique Stock Broking said, with the defence segment back on track on commencement of Tatra dispatches, profitability is expected to witness healthy growth in FY17. The stock also has been recovering from closing lows of Rs 874.65 in September-end to Rs 941 now.

Among the ones that are unlisted, while Pawan Hans has the largest equity paid-up of Rs 245.62 crore, National projects and Scooters India is the next with Rs 85-95 crore; it is followed by Bridge and Roof Company and Central Electron (Rs 50-60 crore equity paid-up).

Hindustan Newsprint and Bridge and Roof company have the highest debt, of more than Rs 100 crore. The two generate sales of Rs 341.08 crore and Rs 1,431 crore, repectively. Nevertheless, National Newsprint remains in losses, whereas Bridge and Roof Company has low single-digit profit margins.

National Projects, generating a revenue of Rs 1,220 crore, has reported the highest adjusted net profit of Rs 47 crore. Pawan Hans generated higher adjusted profit of Rs 38.80 crore, followed by Engineering Projects and HSCC reporting more than Rs 20 crore net profits, according to the latest data available.

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