Shares of Bharat Heavy Electricals Ltd. (BHEL) have gained 5% on Monday morning after reports suggested that the company has been awarded the ₹19,422 crore Talabira Power Project.
The Hindu Business Line reported on Sunday that the company has emerged as the best bidder for the turnkey contract, citing sources.
As per the report, BHEL will build three ultra supercritical units of 800 MW each for NLC India at Talabira.
It is said to be a big order for BHEL as it will load its plants at Tiruchi (Boilers), Haridwar (Turbine Generator) and Hyderabad (Other Components).
As of September 2023, NLC India had 3.6 GW of Thermal Power capacity and 1.4 GW of renewable energy and mining capacity of 50 million tonnes of lignite and coal.
Why Are ₹200 Levels Key For BHEL?
The stock is trading at a very crucial level of around ₹200 as it has not closed or sustained above this mark since February 2012.
It had made three previous attempts since 2012 to cross the ₹200 mark but saw a steep correction at each instance on nearing those levels.
| Date | Peak | Correction From Peak |
| May 26, 2014 | 194.33 | -33% |
| January 30, 2015 | 198.53 | -25% |
| July 21, 2015 | 193.33 | -69% |
Shares of BHEL have delivered positive annual returns since 2021. The stock gained 150% last year, 34% in 2022 and 64% in 2021. In fact, last year was the best calendar year for BHEL since 2003.
Kotak Institutional Equities in a note mentioned that BHEL's market capitalisation can be justified only under a very bullish set of assumptions. All scenarios show that BHEL's net income will be far lower than its current market capitalisation.
The brokerage has a "sell" recommendation on BHEL with a price target of ₹65.
"I was a bit skeptical about talking about buying BHEL at even about ₹150-160 zones. But then I have been proven wrong, given the fact that the momentum continues to be aligned, and it looks like the momentum will still be on. So if somebody is holding it might make sense to write the momentum given the fact that they will probably close FY24 with a brilliant operating leverage coming into picture," said Prakash Diwan, market expert.
"The only concern I have is on execution and what L&T went through a few years back when they actually we're busy executing low margin orders. So if there's a change in strategy, which you are seeing in both the names (L&T), BHEL might continue good revenue build up, but if profitability beyond March is a question then the stock would kind of react but at this point in time definitely the momentum seems to be underway," he added.
Shares of BHEL are trading 4.7% higher at ₹202.70.
First Published: Jan 1, 2024 9:40 AM IST
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