BEML is a public sector undertaking (PSU) with headquarters at Bangalore. It was incorporated in 1964 and began operations in 1965. It was fully owned by the Ministry of Defence, Government of India. In 1992, the government divested 25% stake. So far about 40% equity has been divested to financial institutions and general public. BEML is Asia’s second largest manufacturer of earth moving equipments. The domestic market share of the company is about 70%.
BEML’s machinery has plenty of applications in coal, mining, steel, cement, power, irrigation, construction, road building and railway. The product range has been expanded to cover high quality hydraulics, heavy duty diesel engines, welding robots and undertaking of heavy fabrication jobs.
The manufacturing plants are located at Bangalore, Mysore and Kolar Gold Fields. The product range includes:
Earth moving equipment such as bulldozers, dump trucks, hydraulic excavators, wheel loaders, wheel dozers , tyre handlers, pipe layers, rope shovels, walking draglines, motor graders , scrapers, water sprinklers, aircraft towing tractors and backhoe loaders;
Railway equipment such as integral rail coaches, electric multiple units, rail buses, track laying equipment and overhead equipment inspection cars;
Heavy duty hydraulic aggregates and high power diesel engines.
BEML has been granted "Mini Ratna Category - I status" by the Ministry of Defence, Government of India with effect from 29th August 2006. Key financial data for the year ending 31.03.2007:
| Item | Rs. Crores |
| Gross Income | 2479.28 |
| Total Expenditure | 2144.11 |
| Net Profit | 204.93 |
| EPS (Rs.) | 55.77 |
| P/E | 22.54 |
| Book value | 238.60 |
| Dividend | 100% |
| Market capitalization | 4,297.85 |
Following table gives the shareholding pattern as on 31.03.2007:
| Entity | % holding |
| Central government | 61.23 |
| Mutual funds/UTI | 13.40 |
| Financial institutions/banks | 6.40 |
| FII's | 6.26 |
| Corporate bodies | 2.55 |
| Retail investors < 1 lakh | 5.86 |
| Retail investors > 1 lakh | 3.36 |
| NRI's | 0.81 |
Details of the IPO:
Issue Period: June 27, 2007 to July 03, 2007
Issue Size: 49,00,000 Equity Shares
Issue Type: 100% Book Building
Face Value: Rs.10/-
Price Range: Rs. 1020/- to Rs. 1090/-
Market Lot: 5 shares
Minimum Order Quantity: 5 shares
Retail Investor cap: Rs.100,000
Application forms can be downloaded from here.
Red Herring Prospectus is available here.
This stock is already listed and traded at both BSE and NSE. We have discussed the daily chart in Technical review of select India stocks – Part 3.
Now let us analyze the long term trend for BEML.
When Elliot wave theory is applied to the monthly chart of BEML, currently a full cycle has been completed. Watch waves 1 through 5 and a, b and c. As I have mentioned already, an ideal bull market 50% support is maintained in the monthly chart. It managed to break 61.8% retracement exactly a year ago; now since it has closed above 38.2% retracement levels, it can be concluded that the uptrend has begun. The stock will have to close above 1387. After that we can think of stock testing its all time high at 1788.
Wave Analysis:
| Wave | Low | High | Gain |
| 1 | 10.05 | 114.95 | 11.44 |
| 3 | 56.05 | 261.00 | 4.66 |
| 5 | 96.50 | 1,788.00 | 18.53 |
It can be seen that the 5th wave has witnessed the highest gain. The first wave, usually is shorter compared to the third and fifth.
Conclusion:
The current market price of BEML is 1180. It is about 90 rupees higher than the IPO high price or by about 7.6%. We have seen in technical reviews that the stock is bullish in short term and long term charts. The company has performed very well in the sector. The key financials are good. IPO looks attractive at the current price levels.
One may wonder that the valuations are very high. But that is exactly how the market has gone in the last 4 or 5 years. We certainly can’t think of stock falling to a very low level now. We have seen in Indian stock market – An Outlook that Steel Authority of India has appreciated nearly 17 times. BEML though, got multiplied 178 times between September 2001 and March 2006.