Stock Pick: Bharat Bijlee

by khalid on 11/10/2011 · 0 comments

The company Bharat Bijlee is an electrical engineering company which makes motors, transformers, electrical drives. The company is also in the project management space. It did not  had a good performance in FY 2009-10 because of low order supply and execution but FY 11 was a total turnaround  posting a record EPS of Rs 135 in its history and with a 700 Cr bottomline. There is a huge demand in transformers and order flow have been very good.  The industry is growing at a double digit growth rate.

The company has a very sound order book positions. For Quarter 1 the company had posted a topline of about 120 crores whereas its Profit after Tax (PAT) has also improved  considerably reporting an earnings per share (EPS) of about rupees 48. We are expecting an EPS of about 160 Cr by the end of this fiscal year against 135 in FY11. The company is debt free with a market cap of rupees 390 Cr. The company has also investment in 2 companies HDFC and Siemens. The value of the stocks as of today is around 240 Cr. The company is a cash rich company and can liquidate these stocks as it is an investment. Presently the share is trading at a price to earnings (PE) of 4 multiple. The book value of the company is expected to rise from rupees 580-590 levels to Rs 680 levels by the end of this fiscal year. in short to medium term the stock should give good returns to its investors.

“Bell the bull says: Bharat Bijlee is a rich cash and dividend yield company. Last year the company has paid a 250 % dividend to its investors.”

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