Shares of state-owned BEML have fallen sharply in the recent stock market fall. The PSU mini ratna company has put brokerage firms on edge given its flat performance in the September 2024 quarter, but its long-term outlook remains strong given its growing order book.
BEML reported a marginal decline of 0.75 per cent in net profit at Rs 51.03 crore for the second quarter ended September 30, 2024 on year-on-year (YoY) basis. However, its revenue from operations declined by 6.2 percent year-on-year to Rs 859.84 crore.
BEML’s order book for the quarter stood at Rs 11,453 crore, which includes orders worth Rs 2,784 crore that can be executed in the current year and orders worth Rs 8,669 crore in the following years. The state-owned company manufactures machinery and products for industries like aerospace, mining, railways and metro and has customers like Rail Vikas Nigam, Adani Power and Chennai Metro Rail.
Nirmal Bang Institutional Equities has largely maintained its projections for FY25 and FY26 and projected FY27 figures. The brokerage says we like the company for its improved operational performance, which could see stable EBITDA margin expansion from 10.9 per cent in FY24 to 15.6 per cent in FY27E.
The company’s order book is expected to grow at a CAGR of 20 percent from FY25E to FY27E. Also a capital cycle improvement which will last an estimated 224 days in FY27. BEML company is debt free and positive growth prospects across sectors further strengthen its outlook, giving the company a “Buy” rating and a target price of Rs 4,732.
BEML shares have fallen as much as 31 per cent from their 52-week high of Rs 5,489.15 hit in July 2024. However, the stock closed at Rs 3,792 on Thursday, down another half per cent. The total market capitalization of the company was around Rs 15,800 crore.
on the other hand Elara Capital has cut FY25E earnings estimates by 7 per cent, although it maintained FY26E earnings estimates. The brokerage expects to face continued challenge in metro projects and product mix. There has been a significant decline in order flow due to high base and delay in winning new orders in Railways and Metro. We are increasing the target price of the stock from Rs 3,770 to Rs 3,600, but maintain ‘Sell’ rating.
Disclaimer: This information is for informational purposes only and should not be construed as investment advice. It is recommended to consult a financial advisor before making investment decisions.