This PSU stock has surged 25% in 4 days; zoomed 107% in 6 months

Shares of BEML soared 11 per cent to Rs 4,642, its new high on the BSE in Wednesday’s intra-day trade, surging 25 per cent in the past four days. This came after the company announced on Friday, May 17 that it has bagged an order worth Rs 250 crore from Northern Coal Fields Limited for dump trucks. In past six months, the market price of BEML has more than doubled or zoomed 107 per cent.

At 01:17 pm; BEML was trading 9 per cent higher at Rs 4,556.25, as compared to 0.20 per cent rise in the S&P BSE Sensex. The average trading volumes on the counter more than doubled with a combined 2.9 million equity shares changing hands on the NSE and BSE.

In past nine trading days, the stock of public sector undertaking (PSU) company has rallied 45 per cent as the company reported a solid 62.85 per cent year-on-year (YoY) growth in consolidated profit after tax (PAT) at Rs 256.80 crore in March 2024 quarter (Q4FY24).

The state-owned construction vehicles company had posted PAT of Rs 157.69 crore in Q4FY23. It had reported PAT of Rs 48.20 crore in December quarter (Q3FY24). Revenue from operations grew 9 per cent YoY to Rs 1,513.65 crore.

Earnings before interest, taxes, depreciation, and amortisation (Ebitda) grew 29.1 per cent YoY to Rs 370 crore. Ebitda margin increased by 381 basis points (bps) YoY to 24.5 per cent, aided by gross margin expansion and lower employee costs.

As on April 01, 2024, BEML’s order book stood at Rs 11,872 crore as against Rs 8,570 crore in the previous year, an increase of 38.5 per cent.

BEML operates under three major business verticals: mining and construction, defence and aerospace, and rail and metro. The company’s client base consists of major Government organisation and PSUs including Coal India, Ministry of Defence (MoD), and various metro rail corporation among others. BEML has various repeat orders, specifically in rail and metro sector, owing to its track record in providing products and services to various metro rail corporations.

Since most of the company’s clients are PSUs, they place orders once budget is approved. Execution of these orders under stipulated timelines remains a key monitorable. Further, Government’s push for indigenisation with the “Make in India” campaign, is expected to augur well for BEML’s order book addition, according to analysts.

The steps taken by government regarding various policy actions to boost indigenous design, development and manufacture of defence equipment in the country and make a sustainable defence industrial ecosystem would undoubtedly open various opportunities for the domestic sector.

With the increased defence modernization plans for procurement of High Mobility Vehicles for various projects is under pipeline by MoD. BEML has also entered into MoUs with strategic partners for emerging Defence & Aerospace procurement opportunities.

With Government of India impetus on ending the import of mining equipment and increase in annual output to 1 billion tonnes by 2024, from 893 million tonnes currently, the demand for 'Made in India' Heavy Mining equipment is on the rise.

Also, India is looking to boost its coal output in the next two-to-three years by restarting closed mines and through project specific SPV and integrated planning. The construction equipment market outlook is prospering, BEML said.