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BEML shares end 16% up ahead of fixing record date for 1:1 shares issue by BEML Land Assets

Investors' optimism in BEML shares comes after the company decided to fix a record date to determine eligible shareholders for issuing shares by BEML Land Assets as part of the demerger scheme. (Ashish Raje)Premium
Investors' optimism in BEML shares comes after the company decided to fix a record date to determine eligible shareholders for issuing shares by BEML Land Assets as part of the demerger scheme. (Ashish Raje)

  • Analysts are upbeat on BEML shares going forward as the company is seen as well-placed to capitalize on the imminent opportunities in mining, defence, and railway & metro segments.

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PSU mining firm, BEML on Thursday witnessed a strong bull run as shares skyrocketed nearly 20% in a single day. Investors' optimism in BEML shares comes after the company decided to fix a record date to determine eligible shareholders for issuing shares by BEML Land Assets as part of the demerger scheme. Also, executing the order of construction equipment for the Cameroon Cassava project boosted sentiments. Analysts are upbeat on BEML shares going forward as the company is seen as well-placed to capitalize on the imminent opportunities in mining, defence, and railway & metro segments.

On BSE, BEML shares settled at 1,782.35 apiece rising by 249.15 or 16.25%. The shares have touched an intraday high of 1833 apiece - resulting in an at least 19.55% jump in the day. The shares neared the 20% upper circuit of 1,839.80 apiece in the trading hours before correcting slightly.

The company's market cap is around 7,422.51 crore.

In its regulatory filing, BEML said that "we hereby intimate that Board Meeting of BEML Limited will be held on Thursday, the 18.08.2022, inter-alia, to fix the Record Date for striking the list of eligible shareholders for considering 1:1 issue of shares by BEML Land Assets Limited as per Scheme of Arrangement for Demerger approved by Hon’ble Ministry of Corporate Affairs, followed by Board Meeting of BEML Land Assets Limited

for taking on record the said Record Date as fixed by Board of BEML Limited."

BEML Land Assets is a wholly-owned subsidiary of BEML, incorporated in July 2021, for the demerger of identified surplus and non-core assets as a part of strategic disinvestment of BEML initiated by the government.

In another development, BEML today announced that it is executing an export order valuing $19.76 million with the Ministry of Economy, Planning and Regional Development (MINEPAT), Cameroon for the supply of 71 nos. Earthmoving machinery for preparation of Agricultural Land for Cassava Project under Government of India Line of Credit.

The company has announced its June 2022 quarterly results. In Q1FY23, the company's standalone net loss narrowed to 82.36 crore compared to a loss of 94.01 crore. Revenue from operations stood at 661.98 crore higher than 467.19 crore in Q1FY22. BEML posted a net profit and revenue of 133.42 crore and 1,683.58 crore in Q4FY22 respectively.

Should you invest in BEML shares?

According to a Reliance Securities note, BEML is one of the beneficiaries of the ongoing metro CAPEX in India, with market leadership in metro coaches. There is a rapid increase in demand for urban mass transportation systems in India. Several metro rail projects are in progress to improve intra-city connectivity. Metro rail works (including brownfield expansion) will be carried out in >20 cities in India over the next 5 years.

Further, the note explained that BEML's order at the end of 1QFY23 stood at Rs91 billion (down 19% YoY) while order inflow increased by 91% YoY to Rs5.7 billion during 1QFY23, which provides healthy revenue visibility for the next couple of years. BEML is well-placed to capitalize on the imminent opportunities in mining, defence, and railway & metro segments.

The mining sector, which is open for private sector participation, is likely to boost domestic production and reduce imports.

In the broker's view, the company's orders in defence sector --- are expected for high-mobility vehicles for various defence programmes, 50T trailers, overhauling of tanks and aggregates, aggregates & structures for the national programmes etc. In the rail segment, orders are expected from Chennai Metro, Bangalore Metro, and Bhopal-Indore Metro.

Arafat Saiyed - Senior Research Analysts at Reliance Securities said, "We expect defence and rail segments to drive growth in the near term, led by healthy opportunities. For the defence segment, orders are expected for high-mobility vehicles for various defence programmes, 50T trailers, overhauling of tanks and aggregates, aggregates & structures for the national programmes etc. We have a BUY rating on BEML with a Target Price of Rs2,000."

Also, Reliance Securities expect BEML to witness a 10% CAGR in order inflow over FY22-FY24E.

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