Elara Securities sees up to 60% upside in BEML stock price; here's why

Elara Securities has maintained a 'Buy' on the stock, citing expected double-digit earnings growth during FY25-28E, and a rising order pipeline ensuring steady revenue visibility

BEML, formerly Bharat Earth Movers Limited, is likely to enter a two-digit growth trajectory from financial year 2026-27 (FY27) as a large portion of its order book of ₹16,000 crore would see strong execution momentum, according to analysts at Elara Securities. The order book primarily comprises railway & metro (R&M) and defence contracts. 

 

While the company's management retained a revenue target of 20 per cent in FY26 with margin improvement by 150 basis points, analysts believe it is a daunting task as H1 revenue fell by 1 per cent Y-o-Y. 

 

Elara Securities has maintained a 'Buy' on the stock, citing expected double-digit earnings growth during FY25-28E, a rising order pipeline ensuring steady revenue visibility, along with the scope for a margin rise. The brokerage has lowered its target price to ₹2,700, based on a 37x price-to-earnings (P/E) multiple for September FY27E, due to a slight delay in execution of the Vande Bharat (VB) sleeper order in FY26.

 

On Friday, December 19, the BEML stock rose nearly 2 per cent to hit an intraday high of ₹1,698 on the NSE. Around 12:35 PM, the stock was trading at 1,686.30, up 1.18 per cent from the previous session's close of ₹1,666.90. In comparison, the NSE Nifty50 index rose around 138.20 points or 0.54 per cent to 25,953.75 levels.   READ STOCK MARKETS UPDATES TODAY LIVE

Huge order pipeline

According to analysts at Elara Securities, the R&M segment is expected to witness a huge order pipeline, led by a large ticket order of the Mumbai Rail Vikas Corporation (MRVC) air-conditioned electric multiple unit (MRVC AC EMU) order worth ₹350-400 billion, which is set in the next six months.

 

Additional prospective tenders include fresh orders for Linke Hofmann Busch (LHB) coaches, commuter rail projects, and a robust metro pipeline of around 1,200–1,300 cars over the next two years. The brokerage noted that BEML plans to ramp up delivery of Vande Bharat sleeper trains to two units per month after receiving clearance from the Chief Commissioner of Railway Safety. For LHB coaches, about 20 per cent of revenue is expected in FY26, with the balance in FY27. On the metro side, Chennai Metro’s prototype is scheduled for FY27, Bengaluru Metro deliveries are set to peak in FY27, while Mumbai Metro execution is expected to resume in FY27 and peak in FY28.  ALSO READ | ICICI Prudential AMC Share Price Today: Stock trades at 20% premium; should you book profit?

Defence revenue to accelerate sharply

According to analysts, defence revenues are expected to grow 70–80 per cent year-on-year in FY26, after having already doubled in FY25. The growth is driven by an integrated supply of high-mobility vehicles and strategic systems, including 1,500-horsepower engines for main battle tanks.

 

The order pipeline includes light armoured multipurpose vehicles, high-mobility vehicles, gun-towing vehicles and Pinaka-related orders. The company is also targeting a new business segment in maritime trains and port handling equipment, which could offer a revenue opportunity of ₹40–50 billion over the next four to five years once fully operational.

 

"We expect an earnings CAGR of 31 per cent during FY25-28E with an average ROE of 17 per cent and ROCE of 16 per cent during FY26-28E," the brokerage said. 

 

Elara Securities flagged delays in the receipt of new orders and execution of large R&M orders among key risks for the business.