Mining, defence to drive future growth; ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's Report on BEML management meetWe recently met the management of Bharat Earth Movers (BEML) to get an insight into its business and new triggers emerging on the back of an expected revival in the domestic capex cycle. The company’s key business segments are mining & construction (M&C – 58% of sales), rail & metro (R&M – 36% of sales) and defence (6% of sales). With rigorous efforts made by the current central government in increasing coal production coupled with allotment of new mines to the private sector, BEML is poised to benefit from improved demand in the mining equipment sector. In the defence space, the company has a monopolistic position in supplying Tatra trucks (8x8) to the Indian Army. With the recent removal of the ban along with higher budgetary allocations, BEML is firmly placed to capitalise on this segment. In rail & metro segment, orders have been booked till FY18E and new orders will be taken up only after the planned capex in FY16E-17E. With metro projects planned in ~13 cities and BEML’s hands-on experience in manufacturing all kinds of rolling stock, this segment is also expected to provide a leg-up in the overall growth of the company. With the central government’s ‘Make in India’ campaign gaining steam, BEML is poised to benefit, going ahead.High margin M&C business to improve overall profitability The management feels the metro business is a high margin one vs. other segments of the company. With one-third contribution to overall topline, strong visibility till FY18E and planned capex of | 60 crore in FY16-17, M&C will contribute significantly to overall profitability, going forward.

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