Bharat Electronics Limited Share Soar to New Heights: The Analysis

Bharat Electronics Limited Share has been in the media spotlight after securing a ₹580 crore order from the Indian Army. Subsequent to this news, the company reached its fresh 52-week high of Rs 168.60 per share on 15-Dec-2023, following its 52-week low of Rs 87 on 30-Jan-2023. But, the burning question is: Is this high worth it?

Hello Everyone! Welcome back to Daily Stocks Dekho, where we’re set to analyze Bharat Electronics Limited Share beyond the numbers. Stay tuned as we explore whether this surge is justified and provide you with valuable insights.

About the Company – bharat electronics limited

Bharat Electronics Limited (BEL), operating under the Ministry of Defence, Government of India, stands as a Navratna PSU. The firm produces modern electronic equipment and products for the Air Force, Navy, and Army. Apart from its primary emphasis on defence technology, BEL has actively expanded into many industries.

It actively contributes to homeland security solutions, smart cities, e-governance solutions, space electronics (including satellite integration), energy storage products (such as e-vehicle charging stations and solar solutions), network and cyber security, railways and metro solutions, airport solutions, Electronic Voting Machines, telecom products, passive night vision devices, medical electronics, composites, and software solutions.

In FY 2022-23, the Company acquired technology from DRDO for high capacity Lithium-ion cells for strategic applications and set up a production facility. During FY 2022-23, the Company completed projects in technology areas like Missile Systems, Radars, Electronic Warfare, Avionics, Military Communication, Naval Systems, Sonars, C4I Systems, Electro-optics and Laser, Tank Electronics, Gun Upgrades, Civilian Equipment, Homeland Security, Medical Electronics, and Components.

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News Headlines

Upcoming Projects of Bharat Electronics Limited share

Bharat Electronics Ltd Secures Historic Rs 5,300 Crore Deal with Ministry of Defence for Electronic Fuses​

As per business-standard In a major development, the Ministry of Defence has officially signed a game-changing 10-year contract with Bharat Electronics Ltd (BEL) based in Pune. The deal, valued at an impressive Rs 5,336.25 crore, cements BEL’s crucial role in providing electronic fuses to the Indian Army. 

Indian Army Boosts Defense Arsenal with BEL’s ₹580 Crore AMC Radar Deal

In a significant development, Bharat Electronics Ltd secures a substantial ₹580 crore contract from the Indian Army for the supply of AMC Radars, enhancing the country’s defense capabilities. This project will witness active participation from Indian electronics and associated industries, including MSMEs, as sub-vendors under BEL. The collaborative effort aligns with the ‘Aatmanirbhar Bharat’ program, emphasizing self-reliance in defense manufacturing. 

BEL’s Order Book Soars: ₹3,335 Crore in Additional Contracts Revealed

In a subsequent disclosure, Bharat Electronics Ltd announces receiving additional orders worth ₹3,335 crore since the last disclosure on September 15, 2023, as per thehindubusinessline.com. These orders encompass diverse requirements, including AMC for the AEW&C system, uncooled TI sights, software-defined radios, SWIR payload, AMC for the IACCS, passive night vision binoculars, and more.

Financial Triumph: BEL’s Cumulative Orders Cross ₹23,176 Crore in FY 2023–24

Providing a comprehensive overview, BEL has cumulatively received orders worth Rs 23,176 crores (excl. taxes) in the current financial year 2023-24. This substantial figure reflects the company’s continued success and the trust placed in its capabilities by defense authorities. Says the financialexpress.

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Essentials & Financials- Bharat Electronics Limited share

BEL’s Market Dominance: In the competitive landscape, Bharat Electronics Ltd (BEL) shines with a robust market capitalization of ₹1,21,306 Cr., underlining its leadership position. This significant market capitalization indicates investor confidence and a solid presence in the sector.

Operational Excellence: BEL’s operational prowess is evident with an impressive trailing 12-month operating revenue of Rs. 18,174.24 Cr. This figure illustrates the company’s ability to generate substantial income through its operations.

Fundamentals

Profitability Metrics: Maintaining a healthy bottom line, BEL reports a Return on Equity (ROE) of 22.8% and a Return on Capital Employed (ROCE) of 29.9%. These figures demonstrate how well the business uses its resources to produce profits.

Greater ROE and ROCE indicate effective financial management and the capacity of an organisation to deliver returns to its investors.

Valuation Attractiveness: Investors take note of BEL’s attractive Price to Earnings Ratio (PE) at 36.49, which is notably lower than the sector average of 92.23. This indicates favorable valuations and potential investment opportunities.

A lower PE ratio could suggest that investors should give the company a closer look as it may be undervalued.

EPS: BEL showcases impressive earnings growth, with a Trailing Twelve Months (TTM) Earnings Per Share (EPS) of 4.55 Rs, demonstrating a positive and substantial +21.41% Year-over-Year increase.

Consistent and positive EPS growth is a positive signal, reflecting the company’s financial health and potential for future profitability.

Debt Free: With a Debt-to-Equity (D/E) ratio of 0, BEL exhibits financial prudence, signaling a low proportion of debt in its capital structure. This contributes to financial stability and reduced financial risk.

A low debt-to-earnings ratio shows that BEL is less dependent on outside borrowing, which strengthens its financial stability.

Dividends: Investors find value in BEL’s investor-friendly approach, with a current year dividend of Rs 1.80 and a yield of 1.10%. This adds an attractive incentive for those seeking dividends.

SHAREHOLDING PATTERN

Shareholding Landscape Unveiled: Promoters Hold Steady, Foreign and Mutual Fund Adjustments Mark the Quarter

In the intricate dance of shareholding, Bharat Electronics Ltd (BEL) reveals a stable front as promoters maintain their unwavering stance with a consistent 51.14% ownership throughout the September 2023 quarter. Amidst market fluctuations, there’s a notable commitment to the company’s stability as no changes are observed in promoter pledges.

On the global investment front, Foreign Institutional Investors/Foreign Portfolio Investors (FII/FPI) make apparent adjustments, witnessing a minor dip from 17.35% to 17.19% in their holdings. This subtle shift hints at a thoughtful recalibration of their investment strategy.

Meanwhile, Mutual Funds engage in strategic portfolio maneuvers, trimming their holdings from 19.33% to 18.85%. This measured adjustment suggests a tactical approach in navigating the market dynamics.

In the institutional arena, a deliberate readjusting is observed as Institutional Investors reduce their holdings from 42.19% to 41.38% during the same period, indicating a thoughtful adjustment in their investment positions.

These shifts in the shareholding landscape provide a apparent view of investor sentiment and strategic positioning, contributing to a comprehensive understanding of BEL’s market dynamics.

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Evaluating Financial Statements

As we promised, we are going to delve in beyond the numbers. We understand that looking at figures directly can be a bit confusing. That is why, we have interpreted the meanings of these numbers in this section. Analyzing financial statements provides crucial insights into a company’s performance, stability, and overall financial health, offering a comprehensive view. So let’s start with the Income statement of the company.

Profit & Loss | Income Statements

Income statements serve as a window into a company’s profitability. They lay bare the company’s earnings, the various costs it incurs, and, in the end, unveil the bottom line – the net income. Financial performance is a key component in the strategic planning process for managers, creditors, and investors alike as it helps them determine the profitability of a certain organisation. Profits that are steady show stability, but earnings that are irregular might cause worries.

Revenue from Sales:
-In the last 5 years (March 2019- March 2023): Revenue Increased from 12,164 crores to 17,734 crores (rise of approximately 45.79%.)
-TTM Revenue (March 2023 to TTM): Revenue increased from 17,734 crores to 18,174 crores (the revenue increased by approximately 2.48% over the period).
A consistent or growing revenue is positive, indicating strong demand for the company’s products or services. 

Operating Profit:
-In the last 5 years (March 2019- March 2023): Increased from 2,909 crores to 4,090 crores (rise of approximately 40.64%).
-TTM Operating Profit (March 2023 to TTM): increase from 4,090 crores to 4,382 crores (increased of approximately 7.14% over the period).
A healthy gross profit margin is crucial for covering operating expenses.

Net Profit:
-In the last 5 years (March 2019- March 2023): Increased from 1,887 crores to 2,986 crores (rise of approximately 58.26%).

-TTM Net Profit (March 2023 to TTM): increase from 2,986 crores to 3,324 crores (increased by approximately 11.32% over the period).

Positive net income is a key indicator of financial success, while negative net income signals losses.

EPS

-In the last 5 years (March 2019- March 2023): Increased from Rs 2.58 per share to Rs 4.08 per share (rise of approximately 58.14%.).
-TTM EPS (March 2023 to TTM): increase from Rs 4.08 per share to Rs 4.55 per share (increased by approximately 11.52% over the period).

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Balance Sheet

The balance sheet is a financial statement that provides a snapshot of a company’s financial position at a specific point in time. It is typically organized into three main sections: assets, liabilities, and equity.

The formula for the balance sheet is: Assets = Liabilities + Equity

In this case, In March 2023, Assets = 35,490 crores, Share Capital = 731 crores.

Liabilities = (35,490 – 731) crores = 34,759 crores.

A well-balanced structure between liabilities and equity is often viewed positively by investors and creditors. The company’s financial stability may be strengthened by the healthy combination of debt and equity financing that it advises. A business’s leverage may be estimated from the relationship between total liabilities and equity. 

A lower ratio may suggest lower financial risk, while a higher ratio may indicate a higher level of debt relative to equity.

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Cash Flows Statements

Operating Activities: Company’s Cash flows from operating activities has been fluctuating. It increases from 1,514 crores in March 2019 to 5,093 crores in March 2021 and again declines to 1,267 crores in March 2023.

Investing Activities: Cash flows from investing activities shows a positive growth in March 2023 after registering negative and declining figures in the past 5 years.

Financing Activities: Cash flows from financing activities is negative and declining over the past 5 years.

Net Cash Flow: The net cash flow, a sum of the operating, investing, and financing activities, showcases a rollercoaster journey over the past 5 years. Despite the undulating path, March 2023 brings a positive turn, underscoring the resilience and adaptability of the company amidst financial fluctuations.

Fluctuating cash flows from operating activities of Bharat Electronics Limited Share indicate dynamic shifts in a company’s financial performance and management effectiveness. A growing trend indicates Strong operations, efficient working capital management, and the possibility of strategic investments. On the other hand, a downturn would indicate difficulties that would affect investor confidence, restrict prospects for growth, and call for a more thorough analysis of market dynamics and operational effectiveness.

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Bharat Electronics Ltd Peer Comparison

Highlights Of Earning And Revenue- Annual/Quarterly

In the past year, the company experienced a notable uptick in its annual revenue, surging by 15.48% to reach Rs 18,015.24 Crores. Simultaneously, the annual net profit exhibited robust growth, escalating by 24.41% to Rs 2,984.42 Crores. However, despite a substantial 63.73% rise in stock price, it lagged behind its sector by 12.97%.

In the latest quarter, the company sustained its positive trajectory with a 1% YoY increase in quarterly revenue, totaling Rs 4,146.12 Crores. The quarterly net profit also witnessed a commendable growth of 26.55% YoY, reaching Rs 789.35 Crores. Notably, there are no promoter pledges, signifying a stable and free of constraints ownership structure.

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Summing Up!

Bharat Electronics Limited share (BEL) recently secured a significant ₹580 crore order from the Indian Army, driving its shares upward. Despite fluctuations, BEL’s strategic diversification into defense tech, smart cities, and e-governance is noteworthy. Financially, it recorded a YoY revenue rise and substantial net profit. Orders from the Indian Army totaled ₹23,176 crore, showcasing promising projects. The stock, however, underperformed its sector by 12.97%. In shareholding patterns, promoters remain steady at 51.14%, while FII and Mutual Fund holdings saw marginal decreases. Fundamentals reveal a solid market cap of ₹1,21,306 Cr., an increasing TTM EPS, and a debt-free status. Notably, BEL maintains zero promoter pledges, reflecting a stable ownership structure. While the company’s fundamentals remain solid, it’s essential to acknowledge the declining Cash Flow from Operations for last 2 years, which poses a significant risk factor that cannot be overlooked.

That’s all for today’s post. Hope you get some valuable insights from here.

Happy reading!

Disclaimer

The blog is meant for informational purposes and serves the general analysis of the stocks. Contents provided here are based on careful research and analysis utilizing the fundamental and technical indicators over a period of time. The post does not consist any direct recommendation about Investing or trading in the securities market. Thorough research and careful consideration are necessary for individuals to fulfill their personal responsibility in making financial decisions. Seeking professional advice before making any financial decisions is always advisable.