The shares of BHEL fell over 2 per cent in Monday's trade, tracking state-run firm's March quarter results, only to recover some of the lost ground in the first 30 minutes of trading. By 9.45 am, the Scrip was trading 0.33 percent lower at Rs 78.67. But a few brokerages have prices on the stock that suggest up to 50 percent.
Kotak Institutional Equities finds fair value for BHEL at Rs 39, because it thinks the route to profitability is still uncertain. Goldman Sachs is aiming for a lower target of 34 rupees on the stock as it finds Q4 results as mixed bag. The brokerage said that a path to profitability is still some time away. On the other hand, Nuvama Instituteal Equities, BHEL appears at Rs.85. CLSA finds the stock worth Rs 64, while Citi finds the stock worth Rs 56.
We roll forward to FY 25 E and upgrade to Lower from 'Sell' earlier with revised target price of Rs 67 Rs 36 earlier valuing BHEL at 15 times FY 25 E 12 x FY 24 E factoring in gradual revival of thermal tendering and execution pace, Lilladher said.
BHEL's consolidated profit rose 33 per cent to 611crores in March compared to 912crores in the same quarter last year.
Prabhudas Lilladher said thermal power order is experiencing a pickup after a gap of three years owing to rising power demand. BHEL said it is preferable to place BHEL in 3700 MW of orders. Also, 6,000 MW projects are under bidding stage for Yamunanagar, Adani Mundra, Talabira, and Nayveli, which augurs well for BHEL in the medium term. While in industrial segment management targets to gradually increase its revenue contribution 21 per cent as of FY 23 owing to strong traction witnessed in defence SRGM for Navy railways strong Vande Bharat prospects nuclear and hydro, the brokerage said.
Kotak Instituteal Equities said BHEL's reported an in-line print prior to other expenses, with the write-back of cost provisions driving a beat on Ebitda a miss on consensus.
BHEL is still seeking to increase its bids for incremental thermal orders, and order inflows remain benign.
It is hard to gauge the pace of the margin recovery from hereon. We generally retain our FV at Rs 39 Rs 37 earlier, said Kotak, while retaining its 'Sell' call on the stock.
The most optimistic broker, Nuvama, is among those who are investing in the stock market. However, it note that despite factoring in 4 5 GW of fresh orders and margins of 6 per cent by FY 25 E, it finds limited upside potential for BHEL. This brokerage has a target of Rs 85 for the stock from Rs 80 earlier, as it revised its FY 24 25 E by 3 -8 per cent accounting for 2 GW of thermal and 1.7 GW of hydro Dibang project in FY 24.