BEML - Opportunities Aplenty; Margins To Expand: Prabhudas Lilladher
Better product mix and employee cost efficiency to drive margin expansion.
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Prabhudas Lilladher Report
We hosted the management of BEML Ltd. for a fireside chat on company’s strategy to harness the latest opportunities in India’s railways and defence sectors.
BEML expects strong growth in revenue (implied compound annual growth rate of ~21.5% over FY23-26) and order inflow owing to an influx of opportunities in Vande Bharat, metros, and defence vehicles.
Meanwhile, employee cost efficiency is being aided by manpower gradually falling YoY due to retirements, with the company only hiring more if required.
BEML’s growth outlook is positive given-
Government’s push on defence and railway capex,
robust order pipeline,
margin expansion via operating leverage, and
debt-free balance sheet.
Key monitorables include order win rate, execution, working capital, and the privatisation deal. The stock trades at 26.3 times FY25 consensus earnings per share.
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