Bharat Electronics share price surges over 2% to an intra-day high of Rs 416.90 as the company will be added to the 30-pack Sensex. The stock is the top gainer on Nifty as well, despite the sharp downside in overall market sentiment.
Trent and Bharat Electronics (BEL) will be replacing Nestle India and IndusInd Bank on the Sensex. It is expected that $700 million in passive inflows will come into the new entrants. However, a substantial outflow of $375 million is expected from the stocks excluded as well, said Nuvama Alternative & Quantitative Research.
“Historically, Sensex inclusions tend to see intra-day upmoves, supported by stronger volumes, and a similar trend could play out this time as well,” said Nuvama.
BEL is set to see an estimated inflow of $378 million, or 2.8 times its average daily volume (ADV), while the Tata Group’s retail arm, Trent, is expected to witness $330 million in inflows, about 5.8 times its average daily volume. Nestle India and IndusInd Bank are likely to see outflows worth $230 million and $145 million, respectively.
Nuvama on BEL: Buy with 30% upside potential
Nuvama has a ‘Buy’ rating on BEL, with a target price of Rs 385, which is an upside of 31%. BEL is a leading supplier to all three Indian Armed Forces and the biggest defence electronics beneficiary of the Rs 1.1 lakh crore plus pipeline over the next one–two years. Expansion of the IAF’s existing fleet size, the ongoing modernisation drive, and exports shall drive BEL’s growth, said Nuvama in a different research note.
“We reckon BEL has strong growth potential given its Rs 71,500 crore of backlog and Rs 1.1 lakh crore pipeline-led visibility along with sustained OPMs beating Street’s/management’s guidance (under-appreciated),” said Nuvama. The growth shall be driven by higher localisation, favourable product mix, and cost efficiencies.
BEL stock performance
The share price of BEL has risen 2.66% in the last five trading sessions. The stock has given a return of almost 9% in the past one month and saw a rally of 41% in the last six months owing to tension between India and Pakistan. BEL’s share price has increased 34% in the past one year.