defense shareImage Credit source: FreePik
Every investor in the stock market is looking for a share which can convert his small capital into big wealth. If someone tells you that a share once available at Rs 12 has given investors a whopping return of more than 14 thousand percent, then it may be difficult to believe at once. But BEML, a major company in the defense and infrastructure sector included in the list of government Navratna companies, has done exactly this. The journey of this multibagger stock started from ₹ 12.40 and reached ₹ 2437. It is very important for the investor to understand what is so special in the business of this company that it is continuously gaining momentum and how a new decision of the Defense Ministry has breathed life into it again.
BEML stock is among those select stocks which have not disappointed both long term and short term investors. Since its listing, it has given a huge return of 14,206%. Talking about the latest data, after a big news related to the Defense Ministry, the stock has again gained momentum and it closed at Rs 1,774 with a gain of 1.77%. This stock has proved to be a profitable deal even for short term investors, because in the last one month it has given a strong return of about 27% and 7% in just five days.
There is a very big and solid reason behind the recent rise of this stock in the market. In fact, the Defense Ministry, expressing confidence in the company's capabilities, has handed over an important order worth about Rs 590 crore to it. Under this deal, the company will supply trawl assemblies for the army. For any company, receiving such a big government order completely secures its future earnings and revenue. When there is no shortage of work in the order book of a company, the stock market also shows full confidence in it.
Often people believe that it is only a company manufacturing arms and defense equipment. But the truth is that its business model is very deeply entrenched. Half of the company's total earnings i.e. about 50% comes only from the mining and construction sector. Apart from this, railway and metro projects generate 27% of the income, while the contribution of defense sector is 23%. This division of business into different sectors makes the company very financially stable.
The company has a good name in foreign markets also. So far, more than 1300 heavy equipments have been supplied to 71 countries. At the same time, the order book of the company has crossed Rs 12,700 crore till date. The most important thing is that the company is taking full advantage of 'Make in India' and Defense Indigenization Policy. The result of huge expenditure on Research (R&D) is that today 70% of its products are manufactured with its own technology.
