Please refer to important disclosures at the end of this report
1
Bharat Electronics Limited (BEL) is engaged in design, manufacture and supply o
f
electronic products/systems for defence requirements as well as for nondefense
markets. BEL, a pure defence player in this sector, is likely to report a health
y
performance with its consistent track record in terms of execution and
performance along with a healthy balance sheet and almost zero debt. The
company’s focus on indigenization along with indigenous and collaborative R&D,
selective tie-ups with foreign OEMs along with focus on modernization, consistent
increase in the investment in CAPEX backed by the healthy order book, provides
a long term visibility for its revenue growth. BEL is well positioned to benefit from
the rising defence expenditure supported by a strong manufacturing base and
execution track record, relationship with defense and government agencies, and
increased focus on exports to friendly countries. It plans to set up a Greenfield
weapon systems facility of `5billion in Andhra Pradesh, which will focus on the
design, development and production of weapon systems like fire control, missile
systems and other weapon upgrade systems. The company expects this facility to
be ready within the next two years. The management maintains its 10% revenue
growth guidance for FY17. The key orders likely to be in limelight in FY17 will be
Akash missile system, mobile cellular communication system, commander TI
Sights, Samyukta upgrade, Long range surface to air missile and L-band tropo
upgrade. The company has been maintaining a healthy dividend payout o
f
23.95% (Div. Yield: 1.19%) and has reported a healthy Return on Equity (RoE) o
f
15% in the last 5 years. Hence Buy.
BUY
CMP ` 1,529
Stock Info
Sector
Beta
Bloomberg Code
Shareholding Pattern (%)
Promoters 74.4
MF / Banks / Indian Fls 18.3
FII / NRIs / OCBs 4.3
Indian Public / Others 3.0
Abs. (%) 3m 1yr 3yr
Sensex (0.7) 11.8 29.8
Bharat Electronics 20.6 21.2 365.5
52 Week High / Low 1569/1009
Avg. Daily Volume 33,111
Consumer Durables
Market Cap (
`
cr) 34,153
10
BSE Sensex 27,288
Nifty 8,413
Face Value (
`
)
Reuters Code BAJE.BO
BHE@IN
1.0
Vaibhav Agrawal
022 – 3935 7800 Ext: 6808
Bharat Electronics
Others | Consumer Durables
January 17, 2017
Bharat Electronics | Consumer Durables
January 17, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Bharat Electronics
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment
p
eriod
)
: Reduce
(
-5% to -15%
Sell
(
< -15
)