InvestorQ : Is the government selling BEML at a very cheap price to Tata Motors, Ashok Leyland and Bharat Forge?
sarah Leo made post

Is the government selling BEML at a very cheap price to Tata Motors, Ashok Leyland and Bharat Forge?

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Rashi Mehra answered.
5 months ago
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If you are wondering why there is so much of protests against the privatization of BEML, it is because employees feel the company is being sold to private parties too cheap. They are not entirely wrong. BEML manufactures military trucks, railway / metro coaches, Prithvi Missile launchers, earth movers and construction equipment. With 4 plants running successfully, employees are worried of a blue-chip being given away too cheap.

Let us consider some numbers. Market capitalization of BEML is Rs.5,400 crore and 26% stake sell will fetch Rs.1,400 crore. Against a divestment target of Rs.175,000 crore, that is quite insignificant. BEML is available at about 9X annualized latest quarter P/E. That is too low a price to divest a blue-chip defence manufacturer. Remember that BEML has an order book position of Rs.10,000 crore with potential to grow 60% in this year itself.

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