In a span of 12 months we expect the stock BEML to give a 35% to 40 % returns. If we check the valuation of the company, the stock at the current level is very attractive. Bharat Earth Movers Limited (BEML) is a PSU and considered as one of the Mini Ratna stock. It has three divisions of its businesses; first one is in the mining & constructions, second in defence and third one in rail & metro coaches. All these three segments have an excellent growth potential in the coming years in India and abroad.
The company’s performance is in line and for FY 11 they have posted a top line of rupees 2600 crore with an Earnings per Share (EPS) of rupees 36. For the quarter 1 the EPS is around Rs 4, a mild growth in its result compared to its corresponding quarter in previous year. The book value of the company is more than rupees 500 per share & as of today also it is standing at rupees 500.
The stock price of BEML has corrected from a level of 1200 (52 weeks high) to about 450 levels. Yesterday, we had seen a goodbuying in the stock and it moved to rupees 470.
BEML ltd has nine manufacturing units spread across all and they are sitting on a good order flow position. So, taking these factors into consideration the stock is a definite buy.
“Bell the bull says: A return of 35 – 40 % is expected in a 12 months period.”