BEL Share Price is Falling – Detailed Analysis
Bharat Electronics Stock Review – Why is BEL Share Price Going Down Feb 2019
Bharat Electronics Limited (BEL) is an Indian state-owned aerospace and defence company with about nine factories, and several regional offices in India. It is owned by the Indian Government and primarily manufactures advanced electronic products for the Indian Armed Forces.
BEL produces a wide range of equipment in fields such as Defence Communication, Radars, Naval Systems, C4I Systems, Weapon Systems, Homeland Security, Telecom & Broadcast Systems, Electronic Warfare, Tank Electronics, Electro Optics, Professional Electronic Components and Solar Photovoltaic Systems, BEL also provides turnkey system solutions. Civilian products from BEL include Electronic Voting Machines, Tablet PC, solar-powered traffic signal systems and Access Control Systems.
Bharat Electronics (BEL) Company Review
- Market Capitalisation – The market cap of the company is around Rs. 18,482 Cr. It is a mid-cap company.
- PE Ratio – The current PE ratio of BEL is 10.19. The 3-year average PE of the company is 23 and 5-year average PE is 19. The current PE is 50% down than its 3-year and 5-year average PE. So, at this PE the company looks very attractive.
- Stock Price Movement – Currently (Feb 2019), the stock of BEL is trading at Rs. 76.80. The 52-week of the company is Rs. 157.95. The stock is almost 50% from its top.
- Return on Capital Employed (ROCE) – ROCE is 25.36%. If the ROCE of a company is more than its PE ratio and is being consistently being maintained that way, then it is a very positive and healthy sign.
- Return on Equity (ROE) – The ROE of the company is 18.32%. Both ROCE and ROE are very strong.
- Government Company – Bharat Electronic Ltd is Public Sector Unit (PSU) company. Currently, the government holds 61% stake in the company. In Q2FY18-19, the stake of the government in the company was almost 66%. The government downsized their stake because of the ongoing Bharat 22 ETF and others.
- Foreign Institutional Investors (FII) – In Q2FY18-19, the FII holding in the company was 4.9%. And now in Q3FY18-19, FII’s hold 7% stake in BEL. This means it looks attractive to FII’s too.
- Non-Defence Revenue – Revenue from Electronic Voting Machines, Tablet PC, etc. This time 34% of the company’s revenue came from Non-defence segment. Usually, this contribution of the non-defence segment is around 20%.
- Order Book – BEL has a pending order book of almost Rs. 48,000 Cr. The Trailing Twelve Month (TTM) revenue of the company is close to Rs. 11,000 Cr. So, an earning visibility for the next 4 years can be clearly seen. The order book of the company is very strong. In the last 9 months, BEL has taken orders worth Rs. 16,000 Cr.
Reasons behind the Fall in the Share of BEL
- Being a Mid-cap stock – After September 2018, there have been heavy corrections in mid-cap and small cap. The BSE Small cap index is 35% down and the mis-cap index too is 20%-25% down. Because of this many stocks got hammered, BEL being a part of that hammering.
- Last 12 Quarterly Results – The results of Bel in the last 3 years, that is the results of the last 12 quarters have shown significant fluctuations in the same range (revenues as well as profits). In the quarter 3 years back BEL had a net profit of around Rs. 700 Cr and in the latest quarter they had net profits around Rs. 500 Cr. So, these are the reasons why the stock has underperformed.
- The current quarter of the company has been very good in terms of revenue and profits.
- Bharat Electronic Ltd has very strong order inflows.
- This is a stock which investors can keep in their radar.
- The numbers that are used are approximate and have been rounded for presentation purposes.
- We are not in any way saying that this is a bad company, or the stock of this company is bad.
- We are also not suggesting anyone to immediately go and buy this stock or invest in the stock markets.
- Only an analysis has been presented here. No judgments or final statements are being made here.