CLSA Downgrades Bharat Electronics Due to High Valuations
CLSA has downgraded Bharat Electronics from "buy" to "outperform" due to high valuations despite raising its price target to ₹294. Shares of Bharat Electronics dropped 19% but are still up 40% in 2024 and 122% over the past year. CLSA maintained its "outperform" rating for Hindustan Aeronautics with a price target of ₹4,731, even though its shares fell 17% but are up 54% year-to-date and 170% in the last 12 months. Emkay advised shifting investments from PSUs to defensive sectors like FMCG. CLSA expects the new Modi government to advance the 'Make in India' initiative for defence.
Admin
Jun 6, 2024
379
0
CLSA has maintained its "outperform" rating for Hindustan Aeronautics, setting a price target of ₹4,731. However, the brokerage has downgraded Bharat Electronics from "buy" to "outperform," marking one of the first downgrades in the PSU sector following a sharp sell-off triggered by the unexpected Lok Sabha election results. Shares of Bharat Electronics dropped by 19% on Tuesday
In contrast, Emkay recommended investors shift their focus from PSUs to more defensive sectors like FMCG. Despite the downgrade, CLSA increased its price target for Bharat Electronics from ₹207 to ₹294, noting that the high valuations leave little room for execution errors among these companies.
Following Tuesday's decline, Bharat Electronics' shares are trading at a one-year forward P/E ratio of 35.19, which remains above the company's five-year average P/E ratio of 31.6. CLSA anticipates that the new Modi government will implement the defence 'Make in India' initiative and execute the $43 billion worth of Indian-made products approved by the Defence Acquisition Council for FY2024.
CLSA has maintained its "outperform" rating for Hindustan Aeronautics with a price target of ₹4,731. Despite the recent drop, Bharat Electronics' shares are up 40% in 2024 and have surged 122% over the past year. Similarly, Hindustan Aeronautics' shares, which fell 17% on Tuesday, have increased 54% year-to-date and over 170% in the last 12 months.
Comments (0)