Buy Bharat Electronics; target of Rs 96: Kotak Securities
Kotak Securities’ research report on Bharat Electronics
As per the new pricing policy for nomination projects (35% of order book) finalized by the Ministry of Defense (MoD) in May 2018, a 7.5% PBT margin would be allowed v/s the earlier 10-12% margin. Order book continues to be strong. With the LRSAM order of Rs 92 bn, the order book now stands at Rs 500 bn plus, ~ 5x FY18 revenue.
However, to factor in the potential downgrade in long term margin profile, we cut target price to Rs 96. In view of the adequate upside from current levels, we reiterate BUY.
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