PSU BEL’s bonus shares issue decision today. Details inside

“We wish to inform that a meeting of the Board of Directors of the Company is scheduled to be held on Thursday, the 4th August, 2022 inter alia to consider a proposal for issue of Bonus Shares to the equity shareholders of the Company,” BEL had said in a BSE filing earlier this week.

BEL shares are up more than 58% in a year’s period whereas the PSU defence stock has surged about 31% in year-to-date or YTD terms as compared to a per cent fall in benchmark BSE Sensex. Bharat Electronics Limited (BEL) is an Indian Government-owned aerospace and defence electronics company.

For the first quarter ended June 2022 (Q1FY23), the company’s standalone net profit rose to ₹431 crore as against ₹11 crore recorded in the corresponding period of the previous year. Standalone turnover for the period stood at ₹3,063.5 crore against ₹1,564 crore in the same quarter last year. As of June 30, 2022, the company’s order book position is around ₹55,333 crore.

“Bharat Electronics’ (BEL) management has reiterated its guidance of 15% top-line growth, 21-23% EBITDA margin and ~ ₹200 bn order inflow for FY23. Order inflow guidance for FY23 is in line with our assessment of 5 years’ order inflow possibility of ₹1,110 bn. Management highlighted that possible order inflow from QRSAM ( ₹200 bn) and MRSAM ( ₹150-200 bn) can happen in FY24,” highlighted brokerage ICICI Securities in a post earnings note on July 21.

For the last 5 years, there has been an overhang on BEL’s earnings from the expectations of reducing margins. With management stating confidence to maintain margins in 21-23% range, with high confidence on achieving the upper band, it can be safely stated that margin compression concerns are a thing of the past. This is also likely to improve EPS growth prospects in BEL, in ICICI Securities’ view.

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