BHEL shares up 60% in a year; can they revisit 52-week high levels?

Shares of Bharat Heavy Electricals Ltd (BHEL) have surged more than 60 per cent in the past one year, outperforming the benchmark BSE Sensex's 13.32 per cent jump. On a year-to-date (YTD) basis, the climb has been limited. The stock has gained 2.35 per cent in 2023 so far, largely in line with a 2.94 per cent rise in Sensex.

The scrip on Tuesday settled 1.23 per cent lower at Rs 81.98 after witnessing a 5.16 per cent upswing in the previous session. Considering today's closing price of Rs 81.98, the scrip has slipped 10.36 per cent from its 52-week high of Rs 91.45, a level seen on December 5 last year. Yet, it has gained 98.02 per cent from its one-year low of Rs 41.40, hit on June 20, 2022.

The state-owned power generation equipment manufacturer reported a 34.20 per cent decline in quarterly profit (Q4 FY23). Standalone net profit fell to Rs 598 crore for the fourth quarter ended March 31, 2023, from Rs 909 crore a year earlier. Total expenses rose 5.4 per cent due to a sharp rise in input costs led by raw materials.

A couple of brokerages have price targets on the stock which suggest up to 50 per cent downside. Kotak Institutional Equities pegged BHEL at a fair value of Rs 39, as it believes the company's path to profitability is still unclear. Goldman Sachs has a lower target of Rs 34 for BHEL. The brokerage also felt that the profitability path is still some time away.

On the technical front, support on the counter could be seen between Rs 77 and Rs 80 levels, analysts said. The stock has resistance at around Rs 84 and a decisive breach above the said level can lift the momentum further, they added.

Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher, said, "The stock has recently given a decent rally from Rs 66 zone to touch Rs 88 levels and thereafter has witnessed a consolidation phase maintaining the support near Rs 78 levels. The near-term resistance is at around Rs 84 which needs to be breached decisively to carry on the momentum further."  

Sneha Seth, Derivatives Research Analyst at Angel One, said, "BHEL has formed a strong base around Rs 77-77.50. The overall chart structure looks good until it manages to sustain above the mentioned support zone."

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "The counter has seen a nice up move after making the base near Rs 78-80 levels. At the current juncture, it is trading near its resistance zone of Rs 84. Fresh longs will only get triggered once it gets a daily close above Rs 84 for a target of Rs 90 and stop-loss would be placed at Rs 80. As of now wait and watch."

AR Ramachandran from Tips2trades said, "BHEL has strong resistance at Rs 83.60 on the daily charts. A daily close above this resistance could lead to a target of Rs 88 in the near term. Support will be at Rs 78.20."

Meanwhile, Indian equity benchmarks extended their gains for the fourth straight session, led by gains in banks, financials, consumer goods and technology stocks.

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