Defence has been the flavour of the market for some time now, and BEML is one stock that has been in the midst of a strong uptrend. Key domestic brokerage house, Anandrathi Research, suggests accumulating the stock “strictly in the Rs 4450 – 4,550 per share zone as the short-term dips may offer an opportunity to buy.” They have a 12-month price target of Rs 5,725 on the share price.
According to them, BEML presents a “strategic opportunity with long-term growth drivers from defence, rail, and mining sectors, backed by strong government tailwinds.” According to the report, the privatisation story and hidden land assets provide added potential.
Anandrathi on BEML: Wide product range
BEML manufactures a wide range of heavy earthmoving equipment catering to the mining and construction industry. They also make vehicles for defence forces and coaches for the metro and Indian Railways. The company is a leading mining & construction equipment manufacturer in India and offers a comprehensive and diverse range of mining machinery for both opencast and underground mines. Anandrathi believes its portfolio is a big positive as it includes hydraulic excavators, bulldozers, Wheel loaders, wheel dozers, dump trucks, motor graders, tyre handlers, etc.
Anandrathi on BEML: Grants, land allocation from state governments
The Madhya Pradesh government recently sanctioned the allocation of 60.063 hectares (around 148 acres) of land to the company. The land has been granted for the establishment of a manufacturing plant dedicated to producing rolling stock and coaches for railway and metro initiatives.
That apart, the Chhattisgarh cabinet had approved the allotment of 100 acres of land in Janjgir-Champa district to the Company at 1 rupee per acre for setting up a state-of-the-art Heavy Earth Moving Equipment manufacturing plant in the state.
Anandrathi highlighted that these initiatives are supportive of the share price uptrend continuing in BEML.
Anandrathi on BEML: Big order from Railways
The Indian Railways decided to expand the Vande Bharat Express fleet by introducing sleeper coach variants with plans to increase them to as many as 50, as well as for BEML, as the manufacturing responsibilities have been assigned to the company. Moreover, BEML has entered into three licensing agreements with the DRDO’s Vehicles Research and Development Establishment. Moreover, it is also in the race for the Mumbai Suburban Rail upgrade, which includes automatic doors and 2,856 AC Vande Metro coaches—238 trains of 12 coaches each. This is estimated to be a Rs 30,000–40,000 crore project expected to be executed over seven years.