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This PSU stock is trading at its highest level since December 2010 and here’s why
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
BHEL shares are currently trading at a price-earnings of 74.1 times and 27.7 times, respectively, on the earnings of FY25E and FY26 estimates and is currently ‘Under Review’, Prabhudas Lilladher stated.
Shares of Bharat Heavy Electricals Ltd. (BHEL) are trading with gains of as much as 7% on Thursday, May 2, marking its biggest single-day surge since December 31, 2010.
The stock rose to hit a 52-week high of ₹300.25 per share on the NSE after the company announced that it has entered into a strategic partnership agreement with HIMA Middle East FZE, Dubai for railway signalling business. The market price of BHEL has recovered nearly 300% from its 52-week low of ₹77.3, hit on May 29 last year.
Domestic broking firm Prabhudas Lilladher said the strategic alliance with HIMA will enhance BHEL’s product portfolio in the domains of locomotives, electrical systems, propulsion mechanisms, traction motors, alternators, transformers, and more, thereby catering to the requirements of Indian Railways.
The stock is currently trading at a price-earnings of 74.1 times and 27.7 times, respectively, on the earnings of FY25E and FY26 estimates and is currently ‘Under Review’, the brokerage stated.
HIMA is world’s leading solution provider for safety-related automation in the railways and process industries, BHEL said in a statement.
The partnership with HIMA will further enhance BHEL’s offerings to the Indian Railways, the company said.
The state-run entity has been supplying locomotives, electrics for EMU/MEMU, propulsion systems, traction motors, traction alternators, traction transformers, etc. to the Indian Railways.
Size of the order that BHEL has won is undisclosed.
BHEL has reported a robust order inflow in the first nine months of this financial year (9MFY24) of ₹36,000 crore, up 102% year-on-year.
The heavy electrical equipment maker has already bagged three large orders — 3×800 MW NLC Talabira Thermal Power Plant, 1×800 MW ultra-super-critical expansion unit at DCRTPP (Yamuna Nagar, Haryana), and 2×800 MW NTPC Singrauli Super Thermal Power Project Stage-III] — during the fourth quarter worth ₹30,000 crore, excluding taxes, according to Antique Stock Broking.
The brokerage had estimated four GW of thermal ordering in the current fiscal year, while BHEL has already received 6.5 GW of thermal orders to date.
Antique Stock Broking now expects the company to witness a meaningful reversal in its ordering cycle over the next three to four years.
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