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Shares of BEML rallied 9 per cent to Rs 4,036 on the BSE in Friday’s intra-day trade after the company said it bagged an order worth Rs 250 crore from Northern Coal Fields Limited for dump trucks.
At 11:17 am; BEML was trading 8 per cent higher at Rs 4,003.75, as compared to 0.40 per cent rise in the S&P BSE Sensex. The stock had hit a record high of Rs 4,139.40 on February 2, 2024.
As on April 01, 2024, BEML’s order book stood at Rs 11,872 crore as against Rs 8,570 crore in the previous year, an increase of 38.5 per cent. One of BEML’s significant new orders is from Bangalore Metro Rail Corporation (BMRC), worth Rs 3,177 crore. This translates to almost three years of orders to be executed considering the turnover of FY23.
Meanwhile, in the past six trading days, the stock price of BEML has zoomed 26 per cent after the company reported a solid 62.85 per cent year-on-year (YoY) growth in consolidated profit after tax (PAT) at Rs 256.80 crore in March 2024 quarter (Q4FY24).
The state-owned construction vehicles company had posted PAT of Rs 157.69 crore in Q4FY23. It had reported PAT of Rs 48.20 crore in December quarter (Q3FY24). Revenue from operations grew 9 per cent YoY at Rs 1,513.65 crore.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 29.1 per cent YoY to Rs 370 crore. EBITDA margin increased by 381bps YoY to 24.5 per cent, aided by gross margin expansion and lower employee costs.
BEML, a ‘Schedule-A’ Company, serves core sectors including defence, rail, power, mining, and infrastructure. The company operates under three major business verticals: mining and construction, defence and aerospace, and rail and metro. Government of India owns 54 per cent of total equity and balance 46 per cent is held by public, financial institutions, foreign institutional investors, banks, and employees.
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BEML’s client base consists of major Government organisation and PSUs including Coal India Limited, Ministry of Defence, and various metro rail corporation among others. BEML has various repeat orders, specifically in rail and metro sector, owing to its track record in providing products and services to various metro rail corporations.
Since most of the company’s clients are PSUs, they place orders once budget is approved, typically in August or September. Execution of these orders under stipulated timelines remains a key monitorable. Further, Government’s push for indigenisation with the “Make in India” campaign is expected to augur well for BEML’s order book addition, according to analysts.
BEML is in a sweet spot to capture long-term growth on the back of strong railway & defence capex in India, healthy order prospects in modernization of defence vehicles (HMVs, ARVs, etc.), large tender pipeline for metro & Vande Bharat rolling stock, and ramp up in margins on account of scale-up in execution, analyst at Prabhudas Lilladher said. The stock however, is trading above the brokerage firm’s target price of Rs 4,004 per share.
Although FY24 order inflows were softer than expectations, the company has a significant opportunity pipeline in Rail & Metro worth around Rs 58,000 crore in FY25 (Rail ~Rs 44,400 crore and Metro ~Rs 14,000 crore) and ~Rs 32,200 crore in FY26 which can boost the order book.
Prospects include metro cars in Mumbai, Chennai, Patna, among others, as well as Vande Bharat rolling stock. It also has a defence order pipeline of ~Rs 40,000 crore over the next 4-5 years across high-mobility vehicles (HMVs), armoured recovery vehicle (ARVS), combat engineering equipment, tank engines, etc. including ~Rs 6,000 crore in FY25 and Rs 6,000-9,000 crore in FY26, the brokerage firm said in result update.
