Buy Bharat Electronics; target of Rs 180: Sharekhan

Sharekhan's research report onBharat Electronics

The stock price of Bharat Electronics Limited  (BEL) has corrected sharply by  ~22%  over the past three months due to earnings contraction in Q3FY2018  coupled with delay in order booking of Akash Missile System  (Rs.  6,000  crore) and  long- range surface-to-air missile for P17A (Rs. 9,000 crore).  Further,  subdued  market conditions  and recent lacklustre listing of smaller peers such as Hindustan Aeronautics Ltd.

Outlook

Margins expected to taper off in FY2019E but would pick up in FY2020.BEL continues to remain our preferred pick in the domestic defence play. We maintain our Buy rating on the stock with a revised price target (PT) of Rs. 180.

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