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BEML Ltd. jumps to All-Time High: 148% up in Just 9+ Months!

BEML Ltd. jumps to All-Time High: 148% up in Just 9+ Months!
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Chart: BEML All Time High & 52 Week Low as of 23 Dec 2023

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BEML hit its 52 week low of ₹1128.00 on 16 Mar 2023 and from there it move to ₹2820.00 creating a brand-new All Time High on 22 Dec 2023, giving a whopping 148.59% return in just 9 months and 7 days.

If you had invested ₹10,000 at its 52-week low price, your investment would have grown to ₹24,859 by 23 Dec 2023. This represents a gain of ₹14,859 in just 9 months and 7 days. Given BEML's strong recent performance, Lets find out what opportunities lies ahead for BEML

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BEML Limited’s Record Surge to a New All-Time High

The all-time high of BEML Limited can be a result of many factors. Its previous all-time high was made on 20 December 2023 at ₹ 2764.65. It took 02 days to create a new all-time high at ₹ 2820 on 22 December 2023. In between, it made a low of ₹ 2486.4 on 21 December 2023, implying a correction of over 10 %. It may represent a change in the investors’ sentiment about the company due to improved financial condition or may represent overvaluation. Let’s go through the factors contributing to its all-time high.

Factors Contributing to a Stock’s All-Time High

Positive Earnings Reports

  • Its revenue in Q2 FY24 increased by 13.91% year-on-year and reached ₹ 917 crores.
  • In Q2 FY 24, the cost of goods sold reduced from 90.9% to 78.08% of revenue quarter-on-quarter, due to which the gross profit increased almost 4 times.
  • Since 2020, its net margin has continuously increased, reaching 4.07% in 2022, which represents a net income of ₹ 158 crores.
  • The growing Indian industries are indirectly increasing the demand for coal and minerals. As the mining sector grows, the growth in demand for mining equipment will benefit manufacturers such as BEML Limited.
  • Technology is continuously advancing, and the integration of automation and smart technology in heavy machinery and defense equipment has created opportunities for new product development for BEML.
  • The mining business is normally limited to specific areas in various countries. Still, the mining equipment is sourced from all over the world, depending on its robustness and cost-effectiveness. BEML can capitalize on its capability to create machinery at a lesser cost and can dominate the market.

Positive Analyst Ratings

According to Simple Wall Street, the earnings of BEML Limited are expected to grow 31.36% annually. In the past year, its earnings grew by over 37.5%. In the past 3 months, the company’s stock has been more volatile than the rest of the Indian stocks, moving in the range of 6% a week. On the basis of the discounted cash flow model, its CMP of ₹ 2804.50 is 145.1% overvalued than the fair value of the stock. Even according to the PE ratio of 58.2x, it is overvalued compared to its peers, with a peer average of 47x.

Potential Scenarios Following an All-Time High

(Based on the chart of 1-month timeframe)

Converting numbers and candles into information can provide us with the market’s stance on the stock, which may help us make correct investment decisions. Since the listing of BEML Ltd. in January 2003, it has made 11 all-time highs after a gap of at least a month. In September 2023, it continuously increased for a second month, and whenever such a pattern has appeared in the past, a significant drop in the price is seen. Still, in December 2023, it reached a new high, due to which the past trend is already broken. It can be an indication of a strong positive sentiment amongst the investors. Investors may buy the stock and keep the stop loss at the low already made in December 2023.

BEML Stock Analysis: Potential Supports and Targets

Fri 22 Dec 2023 - In a remarkable market development, BEML has soared to ₹2820.00, setting a brand-new All Time High record! With this surge, there are chances of it becoming volatile, as many investors may like to book their profits by exiting or closing their positions. At this time potential investors and current stakeholders should keep an eye for opportunities for entry or exit.

Below you will find BEML's metrics highlight, potential support and targets derived using Fibonacci Retracement and Extensions method, where Golden Ratio is assumed to be a good support (entry point) and Golden Extension to be good resistance (target point)

KEY PERFORMANCE METRICS

MetricsValueOccured On
Close Price₹2804.15Sat, 23 Dec 2023
52 Week High₹2820.00Fri, 22 Dec 2023
52 Week Low₹1128.00Thu, 16 Mar 2023
All Time High₹2820.00Fri 22 Dec 2023

The above table shows that the close price of BEML on Sat, 23 Dec 2023 was ₹2804.15. Notably, the All-Time High is same as the 52-Week High, indicating that the all-time high was achieved recently and it cloud be a strong resistance level which would need great upward momentum to break.

It's possible that some investors might consider booking profits near the 2820.00 mark, which could apply downward pressure on the stock price. But what does this newly created milestone signify for potential investors? Lets find out.

BEML Fibonacci Retracement Or Support levels

For those considering an entry, the Golden Ratio (61.8%) retracement level of ₹1774 offers a promising point, given the likelihood of a pullback from these levels as new investors might come in at these levels.

Retracement or Support LevelsValues
S123.6%₹2420
S238.2%₹2173
S350.0%₹1974
S461.8% (Golden Ratio)₹1774
S578.6%₹1490
S652 Week Low₹1128

Note: This table was last updated on Sat, 23 Dec 2023.

BEML Fibonacci Extensions Or Target levels

For those considering an exit, the Golden Extension (161.8%) level of ₹3865 offers a promising point, given the likelihood of a downward momentum from these levels as investors might start booking their profits at these levels.

Extensions or Target LevelsValues
T152 Week High₹2820
T2138.2%₹3466
T3161.8% (Golden Extension)₹3865
T4200%₹4512
T5261.8%₹5557

Note: This table was last updated on Sat, 23 Dec 2023.

Making Informed Investment Decisions

For any stock, reaching an all-time high is a significant milestone. Still, conducting thorough research and considering various factors is essential before making investment decisions. To make informed choices that align with your investment goals and risk tolerance, one needs to analyze the company’s fundamentals, industry trends, management’s strategy, and overall market conditions.

Company’s Financial Health

  • In 2022, BEML Limited had a debt of ₹ 381 crores covered by a free cash flow of ₹ 483 crores and cash & equivalents of ₹ 9.76 crores. It has significantly reduced its debt compared to 2021 and also increased its free cash flow.
  • In the short term, it has a liability of ₹ 1786 crores covered by assets of ₹ 4254 crores. The assets of ₹ 798 crores cover its long-term liabilities of ₹ 845 crores. Even though its long-term assets are less in comparison to long-term liabilities, it can easily manage them with short-term assets and free cash flow.

Industry Outlook

  • To become a 5-trillion economy, the Indian government is continuously increasing its spending on infrastructure projects such as roads, railways, urban development, etc. It will result in an increasing demand for construction and heavy-duty vehicles in the coming years. It is a positive trend for the industry and is expected to remain for a long time.
  • Indian government’s push for modernizing its defense forces and self-reliance in defense production has opened new opportunities in the industry to either work on their own or else create a strategic partnership with foreign countries to strengthen the resolve of Atma Nirbhar Bharat. We can see an increase in the order books of companies in the same industry.

Market Sentiment

BEML Limited’s surge to an all-time high reflects investors’ strong optimistic sentiment, which is further boosted by positive earnings and favourable industry trends. Due to the continuously increasing demand for heavy-duty vehicles, BEML is able to sell its products at a higher price, resulting in a continuous increase in net margin over the years. The company has reduced its debt by a significant level with strong asset coverage, indicating solid financial health. It is well positioned in the growing industry fueled by national economic activity and technological innovation. Investors need to conduct detailed research, considering factors like company fundamentals, industry trends, and financial health, to make informed investment decisions.

Disclaimer: Information is provided ‘as is’ and solely for informational and educational purposes, not for trading purposes or advice. We highly recommend to do your own research before making any investment.

About The Author

Nippun

Hi, I’m Nippun, a tech enthusiast from Haryana, India. I have been coding since 2010 and using my coding skills in the share market since 2020. I have been coding scripts in Pinescript that work on Tradingview app/web. I love learning about new technology and applying it to solve real-world problems. Coding and share-market are my passions, and I enjoy finding and fixing bugs in code. I aim to share my skill set and experience that can positively impact society. Feel free to connect with me, and let’s learn from each other. My Twitter