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Buy Bharat Electronics; target of Rs 1560: ICICI Direct

ICICI Direct is bullish on Bharat Electronics has recommended buy rating on the stock with a target price of Rs 1560 in its research report dated September 26, 2016.

September 30, 2016 / 02:42 PM IST
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ICICI Direct's research report on Bharat ELectronics

We attended the analyst meet of Bharat Electronics (BEL) to get an insight into the pace of development in the Indian defence space. The management acknowledged that the pace of decision making has improved over the past several months. The same is also visible from BEL’s order inflows of  Rs 17,094 crore in FY16, which is a significant 79% increase over last year (order backlog  Rs 21,617 crore in FY15). The management sounded positive on the order inflows in FY17E and guided at order inflows of  Rs 10000-12000 crore for the year.

BEL also has a strong balance sheet with near nil debt and cash balance of  Rs 7332 crore. Accelerated order inflows and BEL’s consistent track record in execution, give us reasonable confidence on the robust prospects of the company. Accordingly, we expect BEL to deliver sales and PAT CAGR of 19.1% and 5%, respectively, in FY16-18E. We value BEL at  Rs 1560 i.e. 25x P/E on FY18E EPS of  Rs 62.4 and retain BUY recommendation on the company.

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first published: Sep 30, 2016 02:42 pm
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