Cash and abundance are two words that dont go together for most companies. But not Bharat Electronics. Priced at Rs. 1207 (April 25th), the cash in the company (as on 31-Mar-07) was a heavy 260 rupees a share (2080 crores). This is about 21% of the m-cap.
Kotak and Indiabulls have given a BUY rating to the stock from it's current levels with a 25-30% upside. This is on account of -
a) Trading at 60% discount to BHEL in P/E terms (fwd PE estimates)
b) Expected rise in defence expenditure (rising at 15% p.a.)
c) Excellent free cash flows
BEL is an excellent business to be in. With a huge order book, it would be sometime before competitors can make a dent in BEL's market share and established markets. I was particularly impressed with the huge cash generator, the firm is. In one of the reports (i think it was Kotak), the research house expects the cash per share of BEL to close at Rs. 337 per share.
I have picked up some 10 shares today morning at 1234 rupees. The stock is upto 1296 rupees.
Monday, April 28, 2008
Bharat Electronics
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1 comment:
Hi shankar
I checked on the company and it definitely looks good. Has very high competitive advantage due to government policies. has done well and improved its financials in the last 5-6 years.
however i am not convinced by the analyst's comparison with BHEL. BHEL is not in a monoploy situation. hence it cannot earn as much as a BEL can. however the external opportunity for BHEL may be more than what is available to BEL
regards
rohit
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