BEML stock may give 10-12% returns in next two months

The government has lined up over 5-6 PSU companies for a strategic sale during this fiscal to meet its disinvestment target. But poor market sentiments and legal challenges are delaying the planned disinvestments of state run companies such as BEML, Shipping Corporation of India Ltd, CONCOR, Central Electronics Ltd, Pawan Hans Ltd, IDBI Bank, etc. The government is planning to sell a 26% stake in BEML and has given the approval for the demerger of the assets into non-core and core assets. The Department of Disinvestment and Public Assets Management expects to conclude the disinvestment process during the current financial year. BEML Limited, formerly called Bharat Earth Movers Limited, was established as a Public Sector Undertaking for the manufacture of Rail Coaches and Mining Equipment at its Bangalore facility. The Government of India currently owns 54% while the balance 46% is held by the Indian Public, Domestic Financial Institutions, Foreign Institutional Investors, etc. It is a Category 1 MiniRatna serving the country’s core sectors like Defence, Rail, Power, Mining and Infrastructure. Starting with a modest turnover in 1965 and thanks to its diverse business portfolio, BEML has been able to achieve a turnover of more than Rs 4,337 crore for the financial year 2022. Its three major Business verticals viz., Mining & Construction, Defence and Rail and Metro are serviced by its manufacturing units located in the southern states of the country. BEML’s products are sold and serviced through its large marketing network spread across the country, while its products are exported to more than 56 countries. As part of company’s globalisation strategy, the company has expanded its global reach by opening local companies at Indonesia and Brazil. The company operates under three major Business verticals–viz. Mining & Construction, Defence and Rail & Metro. The company manufactures and supplies Defence Ground Support Equipment such as Tatra based High Mobility Trucks, Recovery Vehicles, Bridge Systems, Vehicles for Missile Projects, Tank Transportation Trailers, Milrail Wagons, Mine Ploughs, Crash Fire Tenders, Snow Cutters, Aircraft Towing tractors and Aircraft Weapon Loading Trolley. The company also plans to take up overhaul and upgradation of battle tanks with a view to assemble and roll out the products. Under the Mining and Construction Business, BEML manufactures and supplies Mining & Construction equipment like Bull Dozers, Excavators, Dumpers, Shovels, Loaders and Motor Graders to various user segments and under Rail and Metro Business, manufactures and supplies Rail Coaches, Metro Cars, AC EMUs, OHE Cars, Steel and Aluminium Wagons to the rail sector. BEML is currently quoting at Rs 1,330 on the bourses and fund managers and traders are bullish on the scrip. The company has its board meeting in the first week of August and analysts tracking the sector and BEML expect the stock to appreciate by 10-12% in the next two months’ time frame on the back of some positive disinvestment news.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.