Broking house, Edelweiss Research is bullish on Bharat Earth Movers. It has maintained buy rating on the stock.
Broking house, Edelweiss Research is bullish on Bharat Earth Movers . It has maintained buy rating on the stock.
The Edelweiss Research report on Bharat Earth Movers:
“Bharat Earth Movers, BEML declared a strong set of Q2FY07 numbers, which were in line with our expectations, with net sales increasing by 58.6% YoY. As we had stated in our Q1FY07 result note, Rs 1.3 billion from sale of ARVs (armoured recovery vehicles) in July were booked in this quarter, whereas the same were booked in the first quarter last year. EBITDA margin improved in spite of higher direct costs, whereas PAT margin declined on account of lower other income component. On a half-yearly basis, sales grew by 19.8% YoY to Rs 9.4 billion and PAT grew by 24.3% YoY to Rs 516 million.”
“We expect sales of Rs 24.3 billion in FY07E against management expectations of Rs 26 billion. The possibility of the deadlock with DMRC, over supply of metro coaches, being solved augurs well for BEML’s future. Additionally, the recent joint venture with a Brazilian firm opens doors for BEML to cater to markets outside India by establishing a foothold in a lucrative market like Brazil. BEML will be one of the big beneficiaries of increased investments in mining and metro railways and has a strong order book position of Rs 22 billion. At a CMP of Rs 1,087, the stock is trading at a P/E of 18.1x and 13.5x on our EPS estimates of Rs 60.2 and Rs 80.8 for FY07 and FY08, respectively. We maintain our ‘buy’ recommendation.”
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