Stock Watch - Bharat Electronics

Stock Watch - Bharat Electronics - BEL

Bharat Electronics Limited (BEL) was established at Bangalore, India, by the Government of India under the Ministry of Defense in 1954 to meet the specialized electronic needs of the Indian defense services.

Positives
..Prime play on defencebusiness which is not vulnerable to economic down-cycles
..High profitability due to improved level of product sophistication
..Strong balance sheet and robust cash generation
..Cheap valuations and huge cash surplus (Rs.307 / share in FY08)

Key Risks
..Defense business involves significant government bureaucracy hence project delays are common.
..Opening of defense business to private sector competition may challenge BEL’s market share in defense electronics.

At current market price of 560,the stock trades at 6 times FY09 earnings. Long term investors can accumulate on declines, for very good returns.

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