The stock has fallen nearly 29% from its all-time high. Experts advise positional buying on dips for long-term gains, but caution over short-term volatility.
BEML shares rose over 1% on Monday ahead of its June quarter earnings print.
After a 29% drop from its all-time highs, can earnings fuel a comeback? SEBI-registered analysts Rohit Mehta and Deepak Pal weigh in.
What’s Working For BEML?
On the macro front, Pal noted favourable factors such as India’s infrastructure push, defence procurement policy, and rail network modernisation to benefit BEML directly. Additionally, upcoming policy measures and capital expenditure plans in the Union Budget are likely to boost demand in its key business segments.
In the previous quarter (Q1 FY25), BEML posted a 9% rise in sales, while operating profit rose by 14.05% year-on-year (YoY).
Mehta highlighted that the company is virtually debt-free, and it has delivered strong profit growth at a 35.8% CAGR over the last 5 years. BEML has also maintained a healthy dividend payout ratio of 21.3%.
But the stock is valued at 5.56 times its book value, and its sales growth has been weak at 5.86% over the past 5 years. Additionally, its return on equity has been low at 9.39% over the last 3 years, he cautioned.
Talking about its shareholding, Mehta noted that promoter holding has decreased from 54.03% in March to 53.86% in June. Foreign Institutional Investors (FIIs) have also pared their stake from 7.26% to 5.66%, while Domestic Insitutional Investos (DIIs) have raised their holdings from 18.69% to 18.74%.
Technical Outlook
On the weekly chart, Mehta identified resistance at ₹4,875 and its all-time high of ₹5,433, with a support zone between ₹3,750 – ₹3,800. He added that the stock was trading near the support zone after a 29% drop from its all-time high. If BEML holds this zone, it could trigger a bounce, but a breakdown may extend the correction.
According to Pal, BEML has recently entered a consolidation phase after a strong uptrend, as indicated by the daily chart. It is taking crucial support near its 200-day Exponential Moving Average (EMA) at ₹3,788.
Since the start of August, BEML has witnessed consistent declines, but this support area remains a strong base. Momentum indicators like the Relative Strength Index (RSI) are in the neutral-to-positive zone, indicating potential for recovery if buying interest sustains.
Pal noted that earnings announcements could trigger short-term volatility. In the near term, he remains slightly cautious, with the possibility of further downside; however, from a long-term perspective, any dip presents a buying opportunity.
He advised traders to consider positional buying around ₹3,790–₹3,800 with a strong support at ₹3,690. If BEML sustains above these levels and holds its rally, he pegged upside targets of ₹4,200–₹4,300 over the next 2–3 months.
In other news developments, the state-owned firm has bagged its first overseas rail-metro contract from Malaysia.
BEML shares have declined 5% so far this year.
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