BEML: Metro Order Book Grows, Profitability Under Pressure

BEML (NSE: BEML) is a public-sector manufacturer of metro coaches, high-speed rolling stock and defence equipment. It has manufactured over 2,100 metro coaches for Delhi, Bengaluru, Mumbai and Kolkata. Rail and Metro represented 65% of its order book in August 2026 but only 24% of FY26 revenue. What happened: In FY26, BEML reported revenue of Rs 4,351 crore, up 8.2% year on year. Net profit dropped 50% to Rs 147 crore. Provisions exceeding Rs 257 crore for cost escalation and forex impacts on metro contracts pressured margins. BEML secured a Rs 5,400 crore NHSRCL contract for high-speed rolling stock on the Mumbai-Ahmedabad corridor and a Rs 180.6 crore order for Vande Bharat Sleeper trainsets. Why it matters: DMRC floated a Rs 923.62 crore tender for 60 Hyderabad metro coaches in October 2026. BEML is pursuing six metro tenders across Chennai, Delhi, Uttar Pradesh, Pune-Nagpur and Mumbai. It secured a first metro export contract worth Rs 550 crore for Africa and is chasing two overseas opportunities estimated at Rs 15,000 crore. Its BRAHMA facility near Bhopal will expand coach capacity from 250 to 350-400 units annually. What I am watching: Revenue grew but profit halved. Cost escalation and forex provisions erased margin gains in FY26. EV/EBITDA stands at 42.3 times against a peer multiple of 19.7 times. ROCE is 7.7% and ROE is 4.5%. Order inflows are strong, but execution discipline and working capital management will determine if margins recover. My stance: The order pipeline is real and metro expansion is genuine. But profitability fell sharply in FY26, and current valuations price in a recovery not yet visible. Until margins stabilise, the risk-reward remains stretched. I do not hold a position in BEML at the time of writing. This is not investment advice.