The successful test-firing of Akash missile on June 18 is adding strength to the stock price of Bharath Electronics Ltd (BEL), manufacturer for the Air Force.
The stock continued the uptrend seen in the last three months and surged 5 per cent today. From the low of ₹982 touched on March 21, the stock has more than doubled to levels of over ₹1,900 currently.
Yesterday’s launch is important as it was the last among the validation trials done on the missile’s production model. BEL, along with Bharath Dynamics Ltd (BDL), has production orders for the Akash Missile System (AMS) of over ₹23,000 crore, with orders worth ₹3,500 crore, already delivered. AMS commands high-margins, boosting BEL’s margins.
BEL is one of the country’s largest defence equipment makers with a strong order book, primarily from the Government.
The company offers a wide range of products and services, including radars, weapon systems and electro optic devices, and also provides turnkey solutions such as battlefield/coastal surveillance systems and integrated air command control systems.
About a quarter of its revenues come from civilian products such as tablet PCs, solar lighting and traffic management systems, telecom and broadcast systems.
In 2013-14, new order inflows declined by around 20 per cent. However, in FY14 there was a year-over-year increase of 3 per cent in sales to ₹6,335 crore and 4.5 per cent in net profit to ₹951 crore. BEL also generates large amount of free cash flow - nearly ₹1,000 crore annually.