This Defence PSU Declares 60% Dividend, Stock Gets 'Buy' Rating

The board of Bharat Electronics Limited (BEL), an aerospace and defence public sector undertaking (PSU), has recommended a final dividend of 60% along with its Q4FY23 results on Saturday. The company has reported a strong healthy quarterly performance.

Based on the performance of the company, leading stock broking firms, Parbhudas Lilladher has given a 'buy' rating to its stock. The brokerage house feels that the company stock will rally by around 16.82%.

Q4FY23 performance

Bharat Electronics Limited reported a robust quarterly performance with revenue growth of ~2% YoY to Rs 64.6 billion and EBITDA margin expansion of 347bps YoY to 28.3%. FY23 order inflows came in at Rs 202 billion, translating to an order book of Rs 606.9 billion (up 5.4% YoY).

Prabhudas Lilladher pointed out in its research note that Bharat Electronics Limited's order pipeline remains healthy for the next two years with large orders expected in the defence and non-defence segment. Even the management has guided that it is confident to achieve revenue growth of 15-20% for the next couple of years.

Valuation of the Stock

The stock-broking firm remains positive on the long-term growth story of this PSU company given the strong order backlog & order pipeline, diversification in newer business verticals like, medical equipment, hydrogen fuel cell, EV batteries, etc., focus on export markets (Egypt, Malaysia, etc.) and government's focus on product indigenization.

The broking firm adds, " We expect Revenue/PAT CAGR of 17.2%/15%, between FY23-FY25E. The stock is currently trading at PE of 22.8x/19.7x FY24/25E. Maintain 'BUY' with a target price of Rs125 (same as earlier) valuing it at 23x FY25E EPS."

Dividend Details

The company announced the dividend through a securities exchange filing on May 20. As per the filing, the Board of Directors of the company at their meeting has recommended a final dividend of Rs 0.60 per equity share (60%) of face value Re 1 each fully paid up for the financial year 2022-23 subject to the approval by the shareholders in the next Annual General Meeting of the company.

However, note that the company has not disclosed record date or book closure dates yet.

Stock Movement

The current market price of Bharat Electronics stock is Rs 110.40, which is up by 3.13% on an intraday basis. In the last one year, the share price has grown rapidly by 43.36%, and in the last three years, it has moved exponentially by 409.93%.

Disclaimer
The stock has been picked up from the brokerage report of Prabhudas Lilladher. Greynium Information Technologies, the author, or the brokerage firm will not be liable for any losses caused as a result of decisions based on the write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.