Brokerage firms continue to remain divided on the state-run Bharat Heavy Electricals Ltd (BHEL). The PSU multibagger has remained under the spotlight of investors and some analysts believe that the stock has turned attractive post correcting 25 per cent from its 52-week high. However, others continued to remain skeptical on the stock, suggesting a 20-55 per cent fall in it.
Analysts tracking the counter are positive on strong inflows on the company, improvement in execution and better financial performance. However, others have their doubts on BHEL considering the rising competition, high debt, fluctuating financials and delayed execution.
The government has refocused on conventional power capacity additions, commissioning 60 GW over the last three years, which may drive growth for engineering companies like BHEL. It is expected to enhance operational performance through increased project deliveries. It is likely to achieve robust revenue growth, with operating leverage boosting margins, said Dalal & Broacha Stock Broking
Shares of BHEL were trading in a tight range of Rs 247-253 apiece, compared to its close at Rs 252.35 on Thursday. The stock dropped 2 per cent during the day, before making a rebound. The total market capitalization of the company stood above Rs 87,000 crore for the day.
"BHEL has secured significant projects in Gujarat, Maharashtra and Andhra Pradesh. This strong order book underscores BHEL's market leadership and provides substantial visibility for the future. We recommend a 'buy' on BHEL with a target price of Rs 300, underpinned by expected improvements in project execution, driving stronger financial performance, and a robust pipeline of order inflows," it added.
BHEL's consolidated revenue increased 28.5 per cent in Q2FY25 on account of a solid performance in the industry and power segments. Its Ebitda turned around, rising from a loss in the year ago period Q2FY24, with a margin of 4.2 per cent supported by the strong performance during the quarter, said Geojit Financial Services.
BHEL's domestic research and development capabilities, presence in export markets, and strong track record of project execution position it for sustained growth and profitability. However, key concerns persist, including intense competition, high employee costs, high debt levels, and delays in project execution, it said with a 'sell' tag and a target price of Rs 205.
BHEL is a public sector entity and India’s largest engineering company. It supplies equipment for power plants in the country. Its products include gas turbines, generators, thermal sets, diesel shunters, turbo sets, hydro sets, power transformers, switch gears, circuit breakers and boilers. The order inflow for Q2FY25 reached Rs 41,087 crore, driven by multiple orders in the power sector.
Antique Stock Broking said that the recent growth in announcements and tendering are expected to translate into awarding growth and the capex cycle is expected to continue. BHEL continues to remain among its top picks from the sector and the brokerage has a 'buy' target price of Rs 364 on the stock.
On the other hand, Kotak Institutional Equities has maintained its 'sell' rating on the stock with a fair value target at Rs 110, suggesting a 56 per cent downside in the counter.
Commenting on the technical chart of BHEL, Kushal Gandhi, Technical Analyst at StoxBox said that the stock has been on a corrective trend. However, it is now displaying potential signs of a trend reversal, indicated by the formation of a double bottom breakout. The price action experienced a breakout, accompanied by a mild gap up, which validates the strength of this breakout.
This is a positive development, and the stock has also reclaimed its 50-DMA. The recent recovery in price from the lows has been supported by an improving RSI, suggesting that bullish momentum is building, he added and recommended to 'buy' BHEL for a short-term opportunity, aiming for a target price of Rs 275, while maintaining a stop loss at Rs 240.