Bharat Electronics Ltd. (BEL) a Navratna PSU company announced that it has signed a Frame Supply Agreement with Thales Reliance Defence Systems (TRDS), Nagpur, for the manufacture and supply of TR Modules, Radar LRUs (Line Replaceable Units) and Micro Modules.
TRDS was incorporated in June 2017 under the Indian Companies Act, 2013. It is a joint venture between Thales (France) and Reliance Defence Systems ltd with a proposed shareholding of 49% and 51% respectively.
BEL is a Navratna PSU, established under the Ministry of Defence, Government of India. It is an aerospace and defence company with about nine factories and several regional offices in India.
The shares of BEL are in the green and they gained 2.33% to trade at ₹ 96.80 apiece at 12:28 PM on Wednesday.
The agreement aims at leveraging the complementary strengths and capabilities of both the companies. It is a part of the offset commitment under the Rafale-India Contract and in line with the ‘Make in India’ Policy. Both BEL and TRDS are active stakeholders in the government’s Make in India Policy.
Leveraging Thales’ Offset commitment as part of the Rafael contract, the joint venture is to develop India’s capabilities in integrating and maintaining Radar and Electronic Warfare sensors. It will develop skills and activity in the Special Economic Zone of MihanNagpur together with an Indian supply chain for the manufacturing of microwave technologies and high-performance airborne electronics.
ICICI Securities has a buy call on the shares of BEL with a target price of ₹ 125 apiece. This translates to an upside of 29.13% as compared to its share price of ₹ 96.80.
BEL is a large-cap company with a market capitalization of 69151 crores. It has an ideal return on equity of 20.55% and an ideal debt-to-equity ratio of 0.01. Its shares were trading at a price-to-earnings ratio of 25.11, which is significantly lower than the industry P/E of 41.05, indicating that the stock might be undervalued as compared to its peers.
Written by Simran Bafna
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