ICICI Direct's research report on Bharat Electronics
As highlighted even in our earlier reports, BEL has strong competency in the area of defence electronics. Historically, a large part of defence capital spends (45-60%) has been in this segment. High-end technologies in the electronics segment, long gestation periods, heavy capital requirements, and secrecy related to defence projects act as key entry barriers in this segment.
Outlook
We re-rate the company due to improved visibility (order book to bill 5x in FY17 from 3x in FY15). We value the company at 26x P/E on FY19E EPS of Rs 7.8 to arrive at a target price of Rs 204 per share. We maintain BUY rating on the stock.
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