Target: â¹3,345
CMP: â¹2,869
We initiate coverage on BEML with a âBuyâ rating at a target price of â¹3,345, valuing it at a P/E of 26x FY26E. BEML is in a sweet spot to capitalise on âMake-in-Indiaâ and the countryâs flourishing metro, railway & defence capex story led by defence order pipeline of â¹40,000 crore, near-term order potential of â¹10,000 crore+ in metro projects, â¹36,500 crore+ opportunity in rolling stock for Vande Bharat trains and healthy order book (â¹12,400 crore) with â¹800 crore capex planned to ramp up execution.
Modernisation of Indiaâs defence capabilities has been a core focus of the government in recent years in order to ensure a combat-ready nation given the precarious nature of its relations with neighbors Pakistan & China. In order to secure the countryâs vast borders with these nations, it is imperative to equip border forces with ample supplies, ammunition and equipment.
High Mobility Vehicles (HMVs) and Armoured Recovery Vehicles (ARVs) manufactured by BEML play a key strategic role in achieving this.
We estimate Revenue/Adj. PAT CAGR of 16.4/50.3 per cent over FY23-26, with significant margin expansion of 420 bps owing to revenue scale-up and falling manpower. The stock is currently trading at a P/E of 29.4x/22.3x on FY25/26E earnings.
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