Brokerage houses maintain positive view on Bharat Electronics post analyst meet

Analysts maintained their positive stance on state-run defence company Bharat Electronics after analyst meet held on Wednesday.

IDFC Securities has retained its outperformer rating on the stock, with a target price of Rs 220 per share as it feels annual order inflow momentum will sustain at Rs 15,000 crore over FY18-20

The company is well-positioned to capture the growing defence spend, it said.

The research house expects EBITDA (earnings before interest, tax, depreciation and amortisation) to grow at CAGR of 14 percent over FY17-19 but its margin is expected to drop by 170 bps to 18.8 percent over FY17-FY19.

Sustained order inflows, long-term earnings potential & improvement in return ratios are key triggers going ahead, IDFC said.

Jefferies has also maintained its buy call on the stock with a target price of Rs 195 per share.

Established in 1954, Bharat Electronics is a R&D and technology driven company operating in competitive defence electronics area. It has increased its investment in research & development by 41 percent to Rs 777 crore in last two financials years.

At its analyst meet, Bharat Electronics guided 16 percent YoY revenue growth and double-digit order flow growth.

"Radars, missile systems, communication & network centric systems, tank electronics, gun upgrades, electro-optic systems and electronic warfare & avionics systems will drive growth," the company said.

BEL is pursuing business opportunities in space electronics, solar energy, homeland security, smart cards and telecom, it added.

Its profit in the year ended March 2017 increased by 18.37 percent to Rs 1,547.62 crore and turnover rose by 17.02 percent to Rs 8,824.70 crore compared with previous year.

At 11:59 hours IST, the stock price was quoting at Rs 188.25, down Rs 3.30, or 1.72 percent on the BSE.