BEML bags metro rail order, order book crosses Rs 7500 crore

BEML, the company engaged in production of rail coaches, spare parts and mining equipments, has bagged an order worth Rs 1421 crore from Bangalore Metro Rail Corporation Ltd (BMRCL). BEML, the Miniratna company that operates under the Defence Ministry, has received an order for the supply of 150 sets of intermediate metro cars to BMRCL. With this order, the company’s 3-car trains portfolio will expand to 6.

With the current order, BEML’s order book has now crossed the Rs 7500 crore-mark and thereby the company’s order book-to-sales has increased to ~2.5x. The company is also expected to increase its revenue contribution from metro rail, which currently stands at 35 per cent in FY16. The company already has a better metro rail projects portfolio in tier-I cities and also intends to foray into tier-II cities going forward.

To add to it, the company has also forayed into the dredging business and it is expected to augment its defence revenue from the government’s enhanced spend on defence. Also, the government is likely to divest 26 per cent stake in the company, which currently stands at 54.03 per cent. Considering all these factors, we can expect a better road ahead for the company. The stock of BEML will continue to rally more once it crosses Rs 1355 level on a closing basis.