Goal: ₹4,004

CMP: ₹3,777.05

We revise our FY25 EPS estimate down by 2.6 per cent factoring in execution of a decrease than anticipated order guide and downgrade the score to ‘Accumulate’ from Purchase with a revised TP of ₹4,004 (₹3,345 earlier) given the sharp run up in inventory worth.

BEML reported blended quarterly efficiency with a giant miss on income (9.1 per cent y-o-y to ₹1,510 crore) and EBITDA margin growth of 381bps y-o-y. Though FY24 order inflows had been softer than expectations, the corporate has a big alternative pipeline in rail & metro price ₹58,000 crore in FY25 and ₹32,000 crore in FY26 which may increase the order guide.

Prospects embody metro vehicles in Mumbai, Chennai, Patna, amongst others, in addition to Vande Bharat rolling inventory. It additionally has a defence order pipeline of ₹40,000 crore over the following 4-5 years throughout HMVs, ARVS, fight engineering gear, tank engines, and so on.

BEML is in a candy spot to seize long-term development on the again of sturdy railway & defence capex in India; wholesome order prospects in modernisation of defence autos (HMVs, ARVs, and so on.); massive tender pipeline for metro & Vande Bharat rolling inventory; and ramp up in margins on account of scale-up in execution.

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