Bharat Electronics - Strong Order Book Brings Better Earning Visibility Going Forward: HDFC Securities
Given healthy growth outlook, expectation of strong order intake, we have revised earnings; increased target price for the stock.
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HDFC Securities Retail Research
Bharat Electronics Ltd., one of India’s largest defence public sector undertaking, specialising in manufacturing defence electronics and is emerging as a key beneficiary of increase in defence capital expenditure.
BEL has advantage over its competitors due to its dominant market position, proven track record and association with the armed forces, established infrastructure and manufacturing facilities, along with strong research and development capabilities.
BEL’s fresh orders pipeline remain healthy, supported by the Government’s growing capital budget allocations and continued focus on rolling out enabling reforms to increase India’s defence product manufacturing capability and gradually reduce imports.
The company is the dominant domestic supplier of defence electronics equipment to the Indian defence forces and it has strategic importance to the Government of India.
Government ownership leads to a sizeable inflow of orders on a nomination basis and large defence offset requirements of foreign suppliers provide opportunities for business growth over the medium term.
BEL’s established track record, large manufacturing capacities, strong R&D base, robust order book with healthy order prospects and strong financial profile led by zero debt, attractive return ratio and better profitability make us positive view towards the stock.
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