Target: ₹2,620
CMP: ₹1,783
BEML expects strong acceleration on all fronts in FY27, with an executable orderbook of ₹55bn, and a sales growth target of 15-25 per cent in the next three years, along with an EBITDA margin of 15-16 per cent despite higher R&D spend as operating leverage kicks in. Management has outlined a robust order pipeline in rail & metro (R&M) and defence, with expected order inflows of ₹15,000 crore for the year, with a closing order book of ₹24,000 crore.
Growth momentum is set to continue during FY28-29 once R&M execution ramps up. The exports order pipeline is increasing, with BEML receiving its first-ever order for metro rolling stocks exports in Q4FY26. In defence, it expects large orders for high mobility vehicle (HMV) for QRSAM, HMV for LRSAM, armoured recovery vehicle (ARV) overhaul, self-propelled mine barrier, ground support systems for LRSAM, and new projects, such as tunnel-boring machines, and ship-to-shore cranes. The high-speed rail (HSR) project is likely to see 16 additional trains in the pipeline, in addition to two currently under development.
We retain Buy with a lower TP of ₹2,620 on 37x March FY28E P/E on account of robust visibility in FY27 on both sales and order inflows fronts, scope for margin improvement, and unexplored exports potential.
Key risks to our call include supply chain constraints on the castings and components front, dragging execution.