🪞At a Glance
BEML is India’s OG Make-in-India machine — building everything from army trucks to metro coaches. In FY25, it hit ₹293 Cr profit with 13% OPM. Sounds strong… until you realize its profit margin has only just started catching up with its ambitions. Still, the 5-year stock CAGR is a blazing 53%.
🧠 TL;DR
| 📊 Metric | FY25 | 5Y Trend |
|---|---|---|
| Revenue | ₹4,022 Cr | ↗ 6% CAGR |
| Net Profit | ₹293 Cr | 🚀 36% CAGR |
| EBITDA (OP) | ₹506 Cr | 📈 2x in 5Y |
| ROCE | 15.6% | ↑ from 5% in FY21 |
| P/E Ratio | 63.2x | 🧨 Expensive |
| Cash from Ops | ₹183 Cr | 🔽 from ₹560 Cr FY23 |
| Order Book | ₹14,610 Cr | 🚄 At All-Time High |
1️⃣ The Business Model: Diversified but Disjointed
BEML operates in 3 main verticals:
- 🪖 Defence: Army trucks, missile launchers
- 🏗️ Mining & Construction: Excavators, dozers
- 🚆 Rail & Metro: Coaches, EMUs, monorail
Each segment sees erratic orders, leading to revenue lumpiness. But metro orders are gaining traction and now form a significant portion of the ₹14,610 Cr backlog.
2️⃣ Sales Growth = Meh. Profit Growth = Fire.
- Revenue CAGR (5Y): 5.9%
- PAT CAGR (5Y): 36%
- What’s happening?
- Margins improved: OPM moved from 8% → 13%
- Depreciation stable, interest low = good bottom line conversion.
- FY25 EPS = ₹70.3 (vs ₹15.3 in FY21) 🔥
3️⃣ Why P/E = 63x? (Yes, 63.)
- Market is pricing in:
- Defence capex tailwinds
- Metro + railway ordering spree
- PSU rerating + potential divestment buzz
- But fundamentals? Still shaky:
- ROE = 10.5%
- Cash Flow from Ops fell despite record profits
- Working capital cycle = 456 days 🫠
4️⃣ Working Capital Horror Show 🎭
| 📦 Metric | FY25 |
|---|---|
| Debtor Days | 154 |
| Inventory Days | 431 |
| Payable Days | 129 |
| Cash Conversion Cycle | 456 days |
Almost 15 months to convert sales into cash — mostly due to PSU buyers and complex billing cycles.
5️⃣ Order Book Update: ₹14,610 Cr 🚄
- Investor call (Jun 2025): PBT at ₹405 Cr, CAPEX plans rolling, and metro business seeing strong visibility.
- Big order wins across metro cities + exports
- Defence vertical also active, but rail infra seems to be the new growth engine
6️⃣ Shareholding? Stable. Retail Participation? Rising.
| 👥 Stakeholder | Mar 2025 |
|---|---|
| Promoters (GoI) | 54.03% |
| FIIs | 7.26% |
| DIIs | 18.69% |
| Public | 20.00% |
| Retail Shareholders | 1.9 lakh+ |
No change in promoter stake. But FII + public shareholding rising — retail buying into the “Rail PSU” theme.
7️⃣ Fair Value Range 🔍
EduInvesting FV Calculation (FY26E)
- Est. EPS FY26: ₹82
- P/E Band: 28x (historical median) – 40x (optimistic PSU rerating)
🎯 FV Range = ₹2,296 – ₹3,280
➡️ CMP ₹4,448 = Trading at a premium, factoring in a lot of future growth
⚠️ Red Flags to Watch
- ❌ Working capital bloat: Cash conversion cycle nearly 1.25 years
- ❌ Low ROE: Still stuck below 11%
- ❌ Cyclical orders → revenue is not predictable
- ❌ Capex-heavy business = earnings volatility
- ❌ P/E 63x = Dangerous altitude for a PSU
✅ But Also… the Bullish Thesis
- 🔧 Orders across metro + defence = margin stability
- 🚆 Railway capex cycle = multiyear runway
- 🔁 PSU divestment possibility (if revived) = rerating trigger
- 💸 PAT up 4.5x in 4 years – not a fluke, but execution
🎤 Final Verdict: “Too Hot for Now, But a Long-Term Engine”
BEML is a true engineering giant — part HAL, part IRCON, part L&T. The stock’s re-rating is based on real execution, not fluff. But at 63x P/E, this train might be speeding into a valuation tunnel.
Buy the dips. Avoid buying the hype.
✍️ Written by Prashant | 📅 June 26, 2025
Tags: BEML, Defence PSU, Metro Orders, Capex PSU, Long Term India, Infrastructure Stocks, EduInvesting 5-Year Recap, Multibagger PSU, Rail Capex, Working Capital Trap
