BHEL shares jump 4% to hit fresh 52-week high; will this upmove sustain?

Bharat Heavy Electricals Ltd (BHEL) shares on Monday jumped 4.30 per cent to hit a fresh one-year high of Rs 329.95. The stock was last seen trading 4.16 per cent higher at Rs 329.50 on BSE. At this price, the multibagger scrip has gained 261.14 per cent in a year.

Kotak Institutional Equities, in its latest strategy note, said BHEL has seen a strong run-up in its stock price, resulting in Rs 77,800 crore addition of market capitalisation (m-cap) in the past year.

"This compares with a hypothetical profit pool of Rs 32,000-64,000 crore for the entire thermal BTG equipment industry, assuming 80GW of new thermal capacity addition, in line with India's FY2032 target, Rs 8,000 crore per GW and 5-10 per cent met profit margin. The entire sector's and BHEL's profit opportunity would be even lower on an NPV basis or if profit margins were to be lower," it stated.

BHEL's current m-cap implies that the company will need to execute 25 GW of annual thermal ordering in perpetuity, which is clearly absurd, the domestic brokerage further mentioned.

On technical setup, support on the counter could be seen at Rs 320, followed by Rs 304 level.

Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking, said the stock looked strong on charts. "It can go up to Rs 335 level in the near term. Keep stop loss placed at Rs 320," Singh stated.

Rupak De, Senior Technical Analyst at LKP Securities, said, "The stock looked positive on daily timeframe. On the higher end, the stock could move towards Rs 340. Support is placed at 304."

The counter traded higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 67.51. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a negative price-to-equity (P/E) ratio of 418.06 against a price-to-book (P/B) value of 4.43. Earnings per share (EPS) stood at (-)0.76 with a return on equity of (-)1.06.

Separately, BHEL has recently invoked three arbitration cases against Rajasthan Rajya Vidyut Utpadan Nigam Ltd (RRVUNL) for releasing the outstanding dues and other claims arising out of contracts. RRVUML was yet to file counter claims, as BHEL's last update.