Fw: Investor's Eye: Update - BEL (PT revised to Rs1,976)

 

 

Investor's Eye [September 30, 2010] Sharekhan www.sharekhan.com

Summary of Contents STOCK UPDATE  Bharat Electronics Cluster: Apple Green Recommendation: Hold Price target: Rs1,976 Current market price: Rs1,743 Price target revised to Rs1,976 Bharat Electronics Ltd (BEL)?s order book stood higher at Rs12,700 crore as on August 1, 2010 as compared to Rs11,350 crore as on March 31, 2010. The current level of order book is 2.5x the company?s FY2010 revenues and provides strong revenue visibility at least for the next two years. The company has targeted an order backlog of Rs15,000 crore (up 32% year on year [YoY]) by the end of FY2011, which implies a total order intake of Rs9,433 crore in FY2011. We have fine-tuned our earnings estimates to factor in the FY2010 annual report numbers. Consequently, our revised earnings per share (EPS) estimates stand at Rs105.4 and Rs129.1 for FY2011 and FY2012 respectively.  Though the strong order book position provides growth visibility and the company?s performance is likely to improve in the coming quarters, the margin pressure and growing competition from the private players are causes for concern. Hence, we maintain our Hold recommendation on the stock with a revised price target of Rs1,976. At the current market price, the stock trades at 13.5x FY2012 earnings estimate. However, BEL is a cash-rich company and adjusting for the cash on its books, its stock?s valuations are more reasonable at 9.2x FY2012E earnings.   Click here to read report: Investor's Eye Attention:  As per SEBI guidelines, clients who want to transact in the Futures & Options segment are required to submit proof of Financial Details. Kindly contact the nearest Sharekhan branch for more information or check the pop-up banner on our website, www.sharekhan.com.

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