Buy BEML; target of Rs 3345: Prabhudas Lilladher

Prabhudas Lilladher's research report on BEML

BEML is in a sweet spot to capitalise on “Make-inIndia” and the country’s flourishing metro, railway & defence capex story led by 1) defence order pipeline of ~Rs400bn, 2) near-term order potential of Rs100bn+ in metro projects, 3) ~Rs365bn+ opportunity in rolling stock for Vande Bharat trains, and 4) healthy order book (~Rs124bn) with ~Rs8bn capex planned to ramp up execution. We estimate Revenue/Adj. PAT CAGR of 16.4%/50.3% over FY23-26E, with significant margin expansion of 420bps 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. Initiate ‘BUY’.

Outlook

We initiate coverage on BEML with a ‘BUY’ rating at a TP of Rs3,345, valuing it at a P/E of 26x FY26E.

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