Over the past year, BHEL share price has increased significantly, rising by about 300 percent. The cost of BHEL shares has almost tripled investors’ money over the last year, closing at ₹319.20 the previous night.
BHEL share price: On Wednesday, May 22, the day after the firm released its March quarter (Q4) scorecard, shares of Bharat Heavy Electricals (BHEL) fell by about 8% in early trading on the BSE. The price of BHEL’s shares opened at ₹305, down from its closing price of ₹319.20, then fell by almost 7.6% to ₹295. However, the company quickly pared losses, and at 9:20 am, it was trading 4.61% lower at ₹304.50 a share. At that point, the equity benchmark Sensex was up 0.07 percent, or 74,005.
Over the past year, BHEL’s share price has increased significantly, rising by about 300 percent. The cost of BHEL shares has almost tripled in investors’ money over the last year, closing at ₹319.20 the previous night.
BHEL share price hit its 52-week high of ₹322.35 in the previous session on May 21, 2024. Its 52-week low level is ₹77.30 which it hit on May 29 last year.
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BHEL Q4 result
Following market hours on Tuesday, May 21, BHEL announced a 25.6 percent year-over-year (YoY) decline in its consolidated net profit for Q4FY24 to ₹489.6 crores, as opposed to a profit of ₹658 crore in the corresponding quarter last year.
The state-owned manufacturer of power generation equipment saw a marginal increase in revenue from operations in the quarter under review, rising to ₹8,260 crore from ₹8,227 crore in the previous year.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 30.6 percent to ₹728 crore, compared to ₹1,049 crore in the same period last year. Margin came in at 8.8 percent, up from 12.8 percent in the previous period.
The company announced a final dividend at 12.50 percent or 25 paise per share with a face value of ₹2 each on the paid-up share capital of the company for FY24.
Brokerage firm Antique Stock Broking also maintained a buy call on the stock with a target price of ₹360, based on 36 times FY26E earnings.
Antique expects BHEL to report an average annual order intake of ₹600 billion during FY24–26E, more than two times against the long-term average of ₹274 billion booked during FY12–23.
“Despite the strong execution, we project the order book to rise to an all-time high of ₹2 trillion by FY27 end. Earnings could grow exponentially over the next three years, given strong operating leverage,” said Antique.
Antique pointed out that BHEL’s business outlook looks promising as nearly 10 GW orders are also expected to materialize in FY25. The brokerage firm expects BHEL’s business performance to improve from FY25 onwards as the company recently bagged better-margin orders enter execution leading to sharp improvement in the company’s profitability.
“We believe BHEL will witness a meaningful reversal in its ordering cycle over the next 3–4 years, led by both industry (non-power) and power segments. Supported by strong ordering, improving execution, and benefits of operating leverage, BHEL’s earnings are anticipated to climb up multi-fold over FY24–26,” said Antique.
Brokerage firm JM Financial also maintained a buy call on the stock and raised the target price to ₹353 from ₹243, valuing the stock 30 times FY26EPS.
“With healthy and executable order book ( ₹1,300 billion) and continued momentum in tendering of new projects in a limited competitive environment, we expect the company to gradually regain growth trajectory, Q3FY25 onwards,” said JM Financial.
However, brokerage firm Kotak Institutional Equities retained its sell call on the stock, slightly revising the fair value to ₹75 from ₹70 earlier.
The brokerage firm has lowered its revenue growth and EBITDA estimates while projecting unchanged EPS (earnings per share) estimates due to lower working capital.
“Our estimates build in 1,000 bps improvement in EBITDA margin from existing levels adjusted for provision write-backs. We retain a sell rating with a fair value of ₹75 ( ₹70 earlier). Our fair value is based on 15 times discounted FY27E EPS,” said Kotak.
Kotak believes order inflows for BHEL have peaked and BHEL’s focus now would be to grow execution.
“With order pipeline for thermal remaining YoY and large railways order unlikely to be the norm, new areas of order will likely help BHEL just about maintain ordering levels,” said Kotak.
“BHEL would prioritize increasing execution. With a 1.3 times year-over-year order backlog, the revenue growth projection is a very low 10-15% YoY. This also occurs on a thin, flat YoY revenue foundation. A possible execution error would affect working capital. Additionally, BHEL might wind up splitting some of the price increases from orders with its suppliers, which would reduce the likelihood of a margin increase going forward, according to Kotak.
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