BEML share price has experienced a remarkable surge of up to 136 per cent over the past year, but the stock may still have room for further growth.
Brokerage firm Prabhudas Lilladher has initiated coverage on the stock with a ‘buy’ recommendation, pegging the target price of ₹3,345, implying a 16 per cent upside potential and valuing it at a P/E (price-to-earnings ratio) of 26 times FY26E.
As per the brokerage firm, BEML stock is currently trading at a P/E of 29.4 times and 22.3 times on FY25E and FY26E earnings, respectively.
Prabhudas Lilladher’s buy recommendation on the stock has come after the stock saw some correction in the recent past.
Also Read: IndiGo share price hits record high; Kotak remains positive, sees a 30% upside in stock
BEML share price has been witnessing some profit booking lately. The stock hit its 52-week high of ₹4,139.40 on BSE on February 2, 2024. At the current market price of ₹2,785.35, the stock has declined nearly 33 per cent in about one and a half months from its 52-week high level.
On Tuesday, March 19, BEML share price declined about 3 per cent in intraday trade.
Also Read: Royal Sense IPO listing: Royal Sense makes strong debut, lists at 90% premium on BSE
Prabhudas Lilladher believes BEML is an attractive play due to factors such as Make In India and the rapid growth of infra projects in railways and defence.
“BEML is in a sweet spot to capitalise on Make in India and the country’s flourishing metro, railway and defence capex story led by (1) defence order pipeline of nearly ₹40,000 crore, (2) near-term order potential of over ₹10,000 crore in metro projects, (3) over ₹36,500 crore opportunity in rolling stock for Vande Bharat trains, and (4) healthy order book (about ₹12400 crore) with nearly ₹800 crore capex planned to ramp up execution,” said the brokerage firm.
Also Read: RPP Infra upper circuit: RPP Infra Projects share price jumps 5% on ₹94-crore order win
The brokerage firm expects BEML to clock a revenue and adjusted PAT (profit after tax) CAGR of 16.4 per cent and 50.3 per cent, respectively, over FY23-26E, with a significant margin expansion of 420bps due to revenue scale-up and falling manpower.
“With nearly 25 per cent of the company’s workforce expected to retire in the next two years, employee costs as a percentage of sales will likely drop by nearly 370bps by FY26E. As a result, BEML is expected to witness considerable EBITDA margin expansion from 9.3 per cent in FY23 to 13.6 per cent in FY26E,” Prabhudas Lilladher said.
Read all market-related news here
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
Download The Mint News App to get Daily Market Updates.
Published: 19 Mar 2024, 01:05 PM IST