BHEL shares rally 14% to hit Rs 265; Is Rs 300-level on the cards for multibagger PSU stock?

Shares of Bharat Heavy Electrical Ltd (BHEL) surged more than 14 per cent during the trading session on Monday to hit new 52-week highs on the back of another potential large order win. The state-run multibagger stock has been rallying sharply lately, adding wealth to investor's kitty.

Shares of BHEL surged more than 14.2 per cent to Rs 269.35 on Monday as the company's total market capitalization topped Rs 93,000 crore mark. It had settled at Rs 235.85 in the previous trading session. The stock has delivered a return of 300 per cent from its 52-week lows at Rs 67.63 hit in April 2023. The stock has rallied 1,250 per cent from its Covid-19 lows.

BHEL has risen on the back of reports that NTPC has approved an investment worth Rs. 17,195 crores for the Phase 3 of Singrauli Super Thermal Power Project for which BHEL was the only bidder. The order book of the company also remains strong in excess of Rs. 1 lakh crores, with order flow increasing each quarter, said Manish Chowdhury, Head of Research, StoxBox.

"Apart from the company’s core strength of building equipment for thermal power plants, BHEL is also looking for other growth opportunities such as railways and defense. Execution will remain a key for further re-rating of the stock. Once the company completes its legacy orders, we expect the margins and profitability to improve upon execution of new projects in future," he said.

BHEL's order book stood at Rs 1.14 lakh crore at the end of the first half of financial year 2023-24  and order inflows till the first half was Rs 33,000 crore. The stock crossed the Rs 200-mark amid the reports suggesting that it has been awarded the Talabira
Power Project worth Rs 19,422 crore.

ICICI Securities has the highest price target on the street for BHEL at Rs 300. The domestic brokerage firm that the company's order wins in the financial year 2024 will cross Rs 65,000 crore. However, overseas brokerage firm Jefferies, which has an underperform rating with a price target of Rs 90.

Technical analysts tracking the counter also continue to remain positive on the stock. They believe that the upward momentum in the counter will continue and one should buy the stock on dips for more upside. However, the stock currently appears to be overheated and some-caution is warranted.

"We gave advice to buy on dips in this stock, so today we have seen momentum in this stock," said Ganesh Dongre, Senior Manager - Technical Research, Anand Rathi Shares and Stock Brokers. "On the daily chart pattern, the stock is still in the bullish zone, so traders can buy on dip this stock with a stop loss of Rs 245 for the target price of Rs 280," he said.

Any pull-back towards Rs 256.50 - 258.50 zone should offer a good buy opportunity on the stock intraday. As of current situation, the stock looks to be in a strong up-trend and should likely extend gains towards Rs 280-285 in a few days, said Riyank Arora Technical Analyst at Mehta Equities.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.