Bharat Electronics surges 6% to hit record high

Bharat Electronics (BEL) hit a record high of Rs 182, up 6% on BSE in intra-day trade, in an otherwise range-bound market on the back of heavy volumes.

At 10:51 am; the stock was up 4% at Rs 179 as compared to 0.02% decline in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 7.79 million shares exchanging hands on BSE and NSE so far.

The state-owned company engaged in defence business is likely to report strong financial numbers for the quarter ended March 2017 (Q4FY17).

Thus far in the month of April, the stock outperformed the market by gaining 15% after state-run defence major said it posted a provisional turnover of Rs 8,800 crore for the just-concluded fiscal 2016-17, registering 17% growth over the previous year’s turnover of Rs 7,522 crore. On comparison, the benchmark index was down 1% during the period.

BEL has been able to maintain good order acquisition this year, BEL Chairman and Managing Director, M.V. Gowtama.
These efforts will enable BEL to continue to have sustained growth while effectively addressing future opportunities in defence business,” Gowtama added.

This implies Q4FY17e total income (net sales + other operating income) at Rs 3,620 crore implying a growth of 13% YoY.

Analysts at Antique Stock Broking believes that, the stock is expected to rerate meaningfully due to long-terms earnings visibility backed by sustained inflow of large-ticket orders, as compared to relatively volatile ordering environment in past 5-7 years.

“Currently, the company has strong order book of Rs 40,000 crore (4.5x TTM sales). Given the strong order backlog and healthy order intake pipeline, revenue growth can be sustained at 15% over 4-5 years,” the brokerage firm said in recent report, maintain ‘buy’ rating on the stock with target price of Rs 202.

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