ICICI Direct is bullish on Bharat Electronics has recommended buy rating on the stock with a target price of Rs 105 in its research report dated October 29, 2018.
ICICI Direct's research report on Bharat Electronics
Bharat Electronics (BEL) reported stellar Q2FY19 numbers. The company reported revenues of Rs 3381 crore, up 36.6% YoY (our estimate Rs 2742.8 crore for the quarter). This was primarily on account of higher execution during the quarter EBITDA margins came in strong at 25.3% vs. 24% YoY due to lower employee expenses. Employee expense de-grew 0.5% YoY. Gross margin contracted 130 bps YoY. Thus, absolute EBITDA increased 43.6% YoY to Rs 854.4 crore PAT grew 38.5% YoY to Rs 571.3 crore (other income declined 72% YoY to Rs 14 crore while depreciation expenses grew 26.1% YoY) BEL’s order book was healthy at Rs 48,995 crore (all-time high) as on October 1, 2018 while order inflows for the quarter were highest ever at Rs 10,755 crore.
We value the company at 15x P/E on FY20E earnings to arrive at a target price of Rs 105 per share. We maintain our BUY recommendation on the stock.
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