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Bharat Electronics share rises 12% in two days, here's why

BusinessToday.In     November 20, 2020

Share of Bharat Electronics Ltd (BEL) gained 12% in two days after management gave a strong commentary on the outlook for business. The company gave guidance for double-digit growth, sustainable margins and better order inflows and indicated strong performance in the medium-term.

BEL share which closed at Rs 96.7 on November 18, ended at Rs 108.20 today, clocking a gain of 11.89% on BSE. 

The stock touched an intraday high of Rs 109.85 , rising 6.55% today. BEL share stands higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

In one year, the share has lost 2.35% but gained 8% since the beginning of this year.  Total 22.99 lakh shares changed hands amounting to turnover of Rs 24.85 crore. Market cap of the firm rose to Rs 26, 363.94  crore on BSE.

The stock of state-owned defence company hit a 52-week high of Rs 118.45 on August 14, 2020 and 52-week low of Rs 56.10 on March 24, 2020.

The company is eyeing order inflows of around Rs 15,000 crore for FY21E (against Rs 13,000 crore in FY20). The state-owned firm expects orders from avionics package for LCA, Akash weapon system, LRSAM, smart city business and electronic warfare systems etc.

During its virtual analyst meet, the firm said it expects double digit (10-15 per cent) topline growth over the medium-term and is likely to be able to maintain EBITDA (earnings before interest, taxes, depreciation, and amortization) margins in the range of 20-21 per cent during this period.

After the analysts meet, Jefferies and Kotak Institutional Equities have maintained positive stance on BEL stock.

Jefferies has retained buy call on the stock with a target price of Rs 130.  It said margins for the firm at 20% were sustainable. The brokerage sees strong visibility in missile system orders for 5-10 yrs (greater than Rs 45000 cr).

Kotak Equities said 2Q FY21 reflected strong execution from existing order backlog.  The firm is targeting double-digit growth guidance and investing in growing scope of business within defence, civilian and services.  

The brokerage revised its earnings estimate by 5%/6% for FY2022/23 on improved execution. It gave a buy call on the stock with target price of Rs 120.

Share Market Highlights: Sensex ends 282 points higher, Nifty at 12,859; Bajaj Finance, Titan, Nestle top gainers

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