By Bharat Electronics (BEL), a state-owned electronics company, saw its shares soar on Monday, July 11, 2023, on a positive trading day. The shares closed at ₹127.4, up 3.58% from the previous day’s closing price of ₹123. The shares hit a 52-week high of ₹127.4 during the day.
Bharat Electronics shares rose on Monday, as the company benefited from several factors, such as:
- The strong performance of the company in the previous quarter, when it reported a net profit of ₹231 crore, up 6.4% year-on-year, and a revenue of ₹3,571 crore, up 9.6% year-on-year.
- The robust order book of the company, which stood at ₹53,844 crore as of June 30, 2023, indicating a healthy growth potential for the company in the future.
- The positive outlook of the company, which expects to achieve a double-digit growth in revenue and profitability in the current fiscal year, driven by its diversified product portfolio and its focus on innovation and quality.
- The favourable market sentiment, as the broader indices, such as the Nifty and the Sensex, also gained on Monday, amid the easing of covid-19 restrictions and the optimism over the economic recovery.
How did the analysts and the investors react to the share price rise?
The analysts and the investors reacted positively to the share price rise of Bharat Electronics, as they praised the company’s performance and prospects, and recommended buying or holding the shares.
Some of the comments and ratings from the analysts and the investors are:
- “BEL is one of the best bets in the defence sector, as it has a strong track record of execution, a diversified customer base, and a competitive edge in the electronics domain. The company is well-positioned to benefit from the government’s initiatives to boost the domestic defence industry and the self-reliance in defence production. We maintain a buy rating on the stock, with a target price of ₹150.” – An analyst from a leading brokerage firm.
- “BEL has delivered a solid performance in the first quarter, despite the challenges posed by the covid-19 pandemic. The company has shown resilience and agility in managing its operations and its finances. The company has also demonstrated its innovation and quality by launching new products and solutions, such as the ventilators, the oxygen concentrators, and the electronic voting machines. We have a hold rating on the stock, with a target price of ₹130.” – An analyst from a reputed research house.
- “BEL is one of our favourite stocks in the defence sector, as it offers a compelling value proposition, with a low valuation, a high dividend yield, and a strong growth potential. The company has a clear visibility of its revenue and earnings, as it has a large and diversified order book, which covers various segments, such as radars, communication systems, weapon systems, and electronic warfare systems. We have a buy rating on the stock, with a target price of ₹140.” – An investor from a prominent fund house.
What are the challenges and opportunities for Bharat Electronics?
Bharat Electronics faces some challenges and opportunities in its business, such as:
- The competition from the private sector and the foreign players, who are also vying for a share of the defence market in India, which is one of the largest and fastest-growing in the world.
- The dependence on the government orders and policies, which may affect the company’s revenue and profitability, as the government may change its budget allocation, procurement process, or strategic priorities for the defence sector.
- The impact of the covid-19 pandemic and the geopolitical tensions, which may disrupt the company’s operations and supply chain, as well as the demand and delivery of its products and services.
- The scope for expansion and diversification, as the company can leverage its expertise and experience in the electronics domain, and explore new markets and segments, such as aerospace, homeland security, smart cities, and renewable energy.