The share price of Bharat Electronics Ltd (BEL) gained 6 percent in the early trade on Friday after brokerages maintained a bullish view on the stock.
The stock gained as much as 6.06 percent to an intraday high of Rs 109.35 apiece on the BSE.
Jefferies maintained a 'Buy' rating on the stock with a target of Rs 130 per share. The brokerage is of the view that the impact of lowered margin on nominated projects began in FY20, and added that the operational leverage and cost-saving indigenization benefits would offset the impact.
Jefferies said that the margin at 20 percent should be sustainable with strong visibility in missile system orders for five-ten years. Focus remains on the working capital, it added.
Kotak Institutional Equities said that BEL’s Q2FY21 results reflected strong execution from the existing order backlog.
The company is targeting double-digit growth and investing in the growing scope of business within defense, civilian and services, it said. The company expects to hold on EBITDA margin range as it banks on indigenization.
The brokerage revised estimates by 5 percent/6 percent for FY2022/23 on improved execution. It maintained a 'Buy' rating with a target price of Rs 120 per share.
ICICI Securities said that the strategy to diversify revenue streams away from a constrained domestic defense budget was a key takeaway from Bharat Electronics’ (BEL) analysts' meet.
“BEL does not mind additional capex to achieve the same. The idea, if properly executed, can allow BEL to maintain double-digit revenue growth in the foreseeable future; it also underlines the limited headroom the base business offers for continuation of growth, given scale,” ICICI Securities said.
The brokerage maintained a 'Hold' rating and raised the target price to Rs 102 per share from Rs 95 earlier.
At 10:35 am, the shares of BEL were trading 5.82 percent higher at Rs 109.10 apiece as against a 0.35 percent gain in the benchmark Sensex.