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Remarks: BEL, a public sector unit, is one of the leading defence companies in India. With the increase in the defence
budget and the focus on modernisation of the defence technology, BEL is best placed to take a sizeable pie
of the defence spend.
The company’s order book currently stands at Rs27,000 crore, which is around 5x its FY2011 revenues. This
gives us a strong revenue visibility for at least the next two to three years.
BEL has entered into joint ventures and technology collaborations to strengthen its position in the defence
services space, reap the benefits of the offset clause (which it believes is worth $300 million in the next five
to seven years) and enter into newer areas of operations.
The March quarter is the strongest for BEL and the upcoming budget could also have something positive to
offer to the defence sector and in turn to BEL. Also, in the Budget 2012-13, the defence allocation has been
increased by 17.6% to Rs1.93 lakh crore and the capex budget has been increased by 15% to Rs79,579 crore.
The key risk remains its execution: a delay in release of orders could lead to slower execution.
At the current market price the stock trades at 12x its FY2013E earnings. The company has huge cash reserve
of Rs5,875 crore, which translates into cash per share of Rs734 and gives the stock further support. We
maintain our Buy recommendation on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Remarks: BEL, a public sector unit, is one of the leading defence companies in India. With the increase in the defence
budget and the focus on modernisation of the defence technology, BEL is best placed to take a sizeable pie
of the defence spend.
The company’s order book currently stands at Rs27,000 crore, which is around 5x its FY2011 revenues. This
gives us a strong revenue visibility for at least the next two to three years.
BEL has entered into joint ventures and technology collaborations to strengthen its position in the defence
services space, reap the benefits of the offset clause (which it believes is worth $300 million in the next five
to seven years) and enter into newer areas of operations.
The March quarter is the strongest for BEL and the upcoming budget could also have something positive to
offer to the defence sector and in turn to BEL. Also, in the Budget 2012-13, the defence allocation has been
increased by 17.6% to Rs1.93 lakh crore and the capex budget has been increased by 15% to Rs79,579 crore.
The key risk remains its execution: a delay in release of orders could lead to slower execution.
At the current market price the stock trades at 12x its FY2013E earnings. The company has huge cash reserve
of Rs5,875 crore, which translates into cash per share of Rs734 and gives the stock further support. We
maintain our Buy recommendation on the stock.
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