PRICE BAND (Rs): 1020 to Rs.1090
ISSUE OPENS/CLOSES: 27th June 2007 / 3rd July 2007
Bharat Earth Movers Limited (BEML), a PSU ‘mini-ratna’, has three segments namely, Mining and Construction, Rail and Metro and Defence. Resultantly, its fortunes are closely interlinked with infrastructure development across the country.
It is also driven by Government spending in segments like Infrastructure Construction, Ports, Pipelines, Roads, Steel, Cement, Power Projects, Hydel Projects, Engineering Industry, Mining; Building Construction etc as its equipment find primary use in these sectors.
BEML also enjoys monopoly status as the manufacturer of Metro Rail coaches in India. With the last Railway Budget sanctioning the addition of 800 rail coaches, double decker trains, high speed trains and mainline EMUs, BEML has been a significant beneficiary in terms of volumes and a healthy order book position.
Overall then, the expansion reason for its fund-raising through this FPO passes muster. Its strategic tie-ups could leverage its position further in its sub-segments.
On the flip side, BEML has underperformed most of the Capital Goods sector stocks till recently and its predominantly Governmental customer base merits attention. Further, the entry of foreign players and imports could hamper its margins further in some segments.
The financials appear quite satisfactory with a 18% topline jump and 10% bottomline jump for the year ended FY07. Notably, Q407 was a good quarter and that performance is expected to set the tone for the CY.
All this suggests that BEML merits attention as a medium to long term bet, though the secondary market price differential which now exists should clearly not be the reason for investing in this issue. One can consider bidding albeit in the mid-range of the price band.
ISSUE OPENS/CLOSES: 27th June 2007 / 3rd July 2007
Bharat Earth Movers Limited (BEML), a PSU ‘mini-ratna’, has three segments namely, Mining and Construction, Rail and Metro and Defence. Resultantly, its fortunes are closely interlinked with infrastructure development across the country.
It is also driven by Government spending in segments like Infrastructure Construction, Ports, Pipelines, Roads, Steel, Cement, Power Projects, Hydel Projects, Engineering Industry, Mining; Building Construction etc as its equipment find primary use in these sectors.
BEML also enjoys monopoly status as the manufacturer of Metro Rail coaches in India. With the last Railway Budget sanctioning the addition of 800 rail coaches, double decker trains, high speed trains and mainline EMUs, BEML has been a significant beneficiary in terms of volumes and a healthy order book position.
Overall then, the expansion reason for its fund-raising through this FPO passes muster. Its strategic tie-ups could leverage its position further in its sub-segments.
On the flip side, BEML has underperformed most of the Capital Goods sector stocks till recently and its predominantly Governmental customer base merits attention. Further, the entry of foreign players and imports could hamper its margins further in some segments.
The financials appear quite satisfactory with a 18% topline jump and 10% bottomline jump for the year ended FY07. Notably, Q407 was a good quarter and that performance is expected to set the tone for the CY.
All this suggests that BEML merits attention as a medium to long term bet, though the secondary market price differential which now exists should clearly not be the reason for investing in this issue. One can consider bidding albeit in the mid-range of the price band.
