Fundamental Analysis for Identifying Market Opportunities.

The CANSLIM Model

Bharat Electronics Limited (BEL)
BSE: 500049
The CANSLIM model is a strategy for stock selection developed by William J. O'Neil, which focuses on
identifying growth stocks with strong potential. The acronym stands for:

 Current Earnings and Sales

 Annual Earnings Increases
 New Product, Service, or Management or HIghs
 Supply and Demand
 Leader or Laggard
 Institutional Sponsorship
 Market Direction

Let's apply the CANSLIM model to Bharat Electronics Limited (BEL), an Indian state-owned aerospace and
Defense Company.
1) C: Current Earnings and Sales
BEL's latest quarterly results show significant growth. The company reported a net profit of ₹859.58 crore for
the latest quarter, with a 40% variance from previous periods. The trailing twelve months (TTM) earnings per
share (EPS) is 4.88, reflecting consistent profitability.

2) A: Annual Earnings Increases

BEL has demonstrated strong annual earnings growth. The full-year net profit is ₹2,739.45 crore, with a sales
turnover of ₹17,734.44 crore. The company’s earnings per share (EPS) for the full year stands at 4.1, and the
operating profit margin is 23%, indicating robust financial health.

3) N: New Products, Services, Management, or Highs

BEL is engaged in the defense electronics sector, which has seen increasing demand due to geopolitical
tensions and government policies favoring domestic defense production. The stock has recently hit a 52-week
high of ₹261, driven by positive market sentiment and robust order book growth.
4) S: Supply and Demand
The company’s stock shows strong demand in the market, evidenced by its rising price and market
capitalization of approximately ₹1.89 trillion. The low debt-to-equity ratio of 0 indicates financial stability,
making the stock attractive to investors.

5) L: Leader or Laggard
BEL is a leader in its sector, evidenced by its substantial market share and strong financial metrics. The return
on equity (ROE) of 23.52% and return on assets (ROA) of 8.92% highlight efficient management and
profitability compared to peers.

6) I: Institutional Sponsorship
BEL has significant institutional ownership, which generally indicates confidence in its future prospects. The
stock's PE ratio of 50.37 suggests that investors are willing to pay a premium, reflecting high growth
expectations.

7) M: Market Direction
The broader market trend supports BEL's upward momentum. The stock has shown a 140.07% increase over
the past year and a current price of ₹259, reflecting strong bullish trends.

Technical Charts and Analysis

Price Movement: The current share price is ₹259, with a recent high of ₹261, suggesting upward momentum.
The stock has experienced a 4.27% increase in the past 24 hours, highlighting strong recent performance.

Technical Indicators: Key indicators such as moving averages and MACD suggest a positive trend. BEL's stock is
trading above its major moving averages, indicating bullish sentiment.

Volume Analysis: Increased trading volumes often accompany price increases, suggesting strong buying
interest. This aligns with BEL’s performance over the past year.

Conclusion

Bharat Electronics Limited fits well with the CANSLIM criteria, showing strong earnings growth, leadership in
its industry, and positive market sentiment. The technical charts further confirm the stock's bullish trend,
making it a potentially attractive investment.

The Top-Down & Bottom-Up Approach Based on Recent Development in the market.
Top-Down and Bottom-Up Approaches in BEL Share Market Analysis

Top-Down Approach

In a top-down analysis, we start with the broader economy and then narrow down to specific sectors and
companies. For Bharat Electronics Limited (BEL), a top-down approach would consider macroeconomic factors
and industry trends impacting defense and electronics sectors in India.

Macroeconomic Environment: India’s defense budget has been increasing, with a focus on indigenization
and modernization of defense equipment. This government support positively influences companies like BEL
which are key suppliers to the defense sector.

Industry Trends: The global and domestic geopolitical climate is prompting higher defense spending. BEL
has capitalized on this with substantial order wins, including recent orders worth ₹2,673 crore from Goa
Shipyard Limited and Garden Reach Shipbuilders & Engineers.

Company-Specific Performance: BEL's financial health and market performance reflect these broader
trends. The company reported consistent profit growth over the last three quarters, contributing to a
significant rise in its share price.

Bottom-Up Approach
In a bottom-up analysis, the focus is on individual companies irrespective of broader market conditions. For
BEL, this involves detailed scrutiny of its financials, management, products, and competitive position.

Financial Health: BEL has shown robust financial performance with a net profit increase from ₹538.48 crore
to ₹859.58 crore over the last three quarters, reflecting a 20% average quarterly growth.
Product and Innovation: BEL's diverse product portfolio in defense electronics, including radars, naval
systems, and electronic warfare equipment, positions it well within its niche market. Recent technological
advancements and contracts for next-generation systems highlight its innovative capacity.

Market Performance: BEL’s share price has risen by 13.56% in the last week and has nearly doubled in the
past year. The stock recently hit an all-time high of ₹260.60.However; analysts have mixed forecasts, with
some predicting potential corrections based on technical indicators.

By integrating these top-down and bottom-up insights, investors can form a comprehensive view of BEL’s
market position and potential growth trajectory. The top-down approach provides context on external factors
influencing BEL, while the bottom-up analysis offers a deep dive into its intrinsic strengths and performance.