Kotak Neo’s Shrikant Chouhan Bullish on BEL and Greenply; Sets Targets

Kotak Neo’s Shrikant Chouhan Highlights Bullish Outlook on BEL and Greenply

Chouhan’s recommendations reflect confidence in the growth trajectories of these companies amid evolving market dynamics.

Bharat Electronics Ltd: A Strong Growth Narrative

Bharat Electronics Ltd (BEL) is gaining traction, with a current market price (CMP) of ₹374 and a fair value (FV) target of ₹410. The company is expected to maintain its growth momentum, driven by a robust pipeline of defense projects, including the Quick Reaction Surface to Air Missile (QRSAM) and the Advanced Medium Combat Aircraft (AMCA) programs. Management anticipates that the year-end order book will exceed ₹1 lakh crore, a significant increase from approximately ₹75,000 crore over the past three years.

The missile segment is emerging as a key growth driver, with revenues projected to account for a substantial share of overall sales in the coming years. The QRSAM program, valued at around ₹30,000 crore, is expected to be a significant catalyst for revenue growth. Additionally, BEL’s involvement in the AMCA program positions it favorably for long-term opportunities, as it competes to become the lead integrator for India’s indigenous air-defense initiative.

Operational Strengths and Financial Outlook

BEL has demonstrated a strong operational performance, achieving a revenue compound annual growth rate (CAGR) of 17% from FY24 to FY26, with a medium-term revenue growth guidance of over 15%. The EBITDA margins have expanded to nearly 30%, bolstered by increased indigenization and a favorable product mix. The anticipated rise in order inflows is expected to enhance revenue visibility over the next few years, reinforcing a positive outlook for the stock.

Greenply Industries: Capitalizing on Market Opportunities

Greenply Industries, trading at a CMP of ₹314, is also on Chouhan’s radar with a Buy rating and a fair value target of ₹354. The company is poised for growth in its plywood and medium-density fiberboard (MDF) segments. Management has projected a 10% volume growth in plywood for FY27, supported by a 13.8% year-on-year increase in Q1FY27. Factors such as the implementation of Bureau of Indian Standards (BIS), reduced imports, and enhancements in operational efficiency are expected to drive this growth.

In the MDF segment, Greenply anticipates a robust 25-30% volume growth for FY27, following a 24.7% increase in Q1FY27. The company is focusing on value-added products, which, along with improved efficiencies, are expected to enhance EBITDA margins. Furthermore, the ongoing construction of a new plywood plant in Odisha and the expansion of MDF capacity signal a commitment to long-term growth.

Key Highlights

• BEL’s order book expected to exceed ₹1 lakh crore, driven by major defense projects.
• Missile revenues projected to grow significantly, enhancing overall revenue share.
• Greenply targets 10% plywood volume growth, supported by operational improvements.
• MDF segment expected to see 25-30% volume growth, bolstered by capacity expansion.
• Both companies are well-positioned to benefit from favorable market conditions.

Investor Note: The outlook for BEL and Greenply reflects strong operational fundamentals and growth potential, making them attractive options for investors looking to capitalize on the evolving market landscape.