From ₹35 to ₹300: BHEL price targets present contrasting opinions

Brokerage firm ICICI Securities has raised its price target on state-run BHEL to ₹300, which is double of their earlier target of ₹150 per share. The revised price target implies another 50% upside from current levels.

The brokerage wrote in its note that their thesis of coal power plant as a backup and reliable power is playing out. It expects total order inflow in financial year 2024 to cross ₹65,000 crore for BHEL.

BHEL's gross margins are also likely to improve by 300 basis points from current levels in the next few years with execution improving by 30% to 40% led by a huge order book, ICICI Securities said.

ICICI Securities' ₹300 price target on BHEL is the highest target for the company among analysts who track the stock.

Earlier this month, another brokerage Antique Stock Broking had published a note on BHEL, calling it a "potential turnaround story" that is playing out and ascribed a price target of ₹230 on the stock.

But despite a 150% surge over the last 12 months, not everybody on the street is convinced of BHEL's prospects. Only five out of the 18 analysts who track the stock have a "buy" recommendation on the stock, while 12 of them have a "sell" rating.

Among those analysts who have a "sell" rating on BHEL include Jefferies, with a price target of ₹80, CLSA, with a price target of ₹78 and Kotak Institutional Equities, with a price target of ₹65.

Kotak Institutional Equities in its note on BHEL mentioned that the move in the stock is a clear violation of any "reasonable framework." The note further said that BHEL's current market capitalisation can only be justified under a very bullish set of assumptions. Despite this, all scenarios point to the fact that BHEL's net income will be far lower than its market capitalisation.

Shares of BHEL are trading 0.3% higher at ₹201.85.