Shares of state-run Bharat Heavy Electricals Ltd (BHEL), which has given multibagger returns to investors in the past year, climbed 3 percent in Tuesday's trade to hit a fresh 52-week high of Rs 143.60 apiece on the NSE. The stock of the state-run power firm continued its upward march for the eighth straight session.
Today's fresh up move came after BHEL said on Monday it had won an order for India's largest capacity hydro project (2,880 MW multipurpose project) against international competitive bidding (ICB). "The order for the 12x240 MW project located in Roing in the Lower Dibang Valley district of Arunachal Pradesh has been placed on the company by NHPC," it said.
The company said that critical equipment for the project will be manufactured by its plants at Bhopal, Bengaluru, Jhansi, and Rudrapur, while the execution activities on-site will be carried out by the firm's power sector - eastern region division, Kolkata.
Amit Anwani, research analyst at Prabhudas Lilladher, said, "We await order size details. However, the execution time frame for this project is likely to be of longer duration (9-10 years)."
He added that a pickup in thermal power orders and BHEL's focus on diversification in segments such as railways, defence, nuclear, and hydro augurs well for the company in the long term.
The analyst assigned a 'reduce' rating on the counter with a target price of Rs 67. "The stock is currently trading at PE (price-earnings) of 53.7 times/30.5 times FY24/25E," he said.
BHEL shares have gained 36 percent in the last eight trading sessions. The stock has rallied 75.36 percent so far this year and is up 132 percent in the last one year.
JM Financial also initiated coverage on BHEL with a 'buy' rating and target price of Rs 165. The brokerage expects the company to deliver revenue/EBITDA/PAT CAGR of 17 percent/76 percent/91 percent, respectively, over FY23-26E supported by healthy ordering, improving execution and the benefit of operating leverage.
In terms of technicals, the 14-day relative strength index (RSI) of the stock stood at 82.5, signalling its trading in the overbought zone. This implies that the stock may show a pullback.
BHEL stock has a one-year beta of 1.3, indicating very high volatility during the period. The counter is trading higher than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
The central government has a majority stake in BHEL. As of the June 2023 quarter, the government held 63.17 percent stake.
First Published: Sept 5, 2023 12:29 PM IST
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