Thought I should reproduce my brief response to Salil’s query on BHEL for wider and easier visibility reading
“Salil, BHEL was my top pick core pick eight to ten years ago ~ I had it in every clients portfolios picking it in the early Hundreds ,when FV was Rs 10,and even getting the 1:1 bonus advantage in June 2007 ~ Power Sector was taking off big time and BHEL was beautifully positioned to supply the Power Plant Equipments ~ It’s order books were overflowing ~ The last Quarter in the FY was always brilliant ~ Clients made good monies and many yet hold this scrip ~ However BHEL has belied great expectations after that brilliant run ~ BHEL was simply unable to ramp up capacities fast enough to cope with the order buoyancy ~ even our govt was frustrated and gave BHEL an ultimatum or else they would route orders to overseas competitors ~ this inability meant cap on some really exciting growth that was simply beckoning
However FY 12 has not been so bad ~ Net is Rs 7087 crs giving an EPS of Rs 29 on the Equity of Rs 489.52 crs ~ From October 2011 the Equity Share FV is now Rs 2 from the earlier Rs 10 ~ Reserves are @ Rs 25000 crs giving a Book of Rs 104 ~ Dividend is 320% (up from 311.5% in FY 11)and with the Share Price currently @ Rs 220 the Relative Earnings and Book Multiples are fairly attractive at 7.5 and 2.1 respectively ~ Market Cap is @ Rs 54000 crs ~ but a year ago was over Rs 100000 crs ~ The Share Price has slid dramatically by over 50% inside one year and at Rs 220 it is near it’s recent 52 week lows of Rs 197 ~ The Shareholder Set is strong with 67.72% held by the Government and 13+% held by FIIs ~ The Government had intended to divest 5% and BHEL had even filed a DRHP with SEBI in September 2011 which it has since withdrawn
The Power Sector is plagued with Project Implementation delays on account of delays in procuring the crucial assured Coal & Gas Feed committments,non closure of Financial Outlays and delays in deliveries of Plant Equipments ~ BHEL may just have got a breather to catch up ! ~ ~ FY 13 should see Sales crossing Rs 50000 crs and PAT moving towards Rs 10000 crs ~ BHEL is also enthusiastic on it’s diversification plans in Transportation,Oil and Gas,Solar,Nuclear and Water and now has ramped up core manufacturing capacities to over 20000 MW
BHEL looks quite interesting @ Rs 220 ~ Beta is 1.18 ~ Trading Volumes are good for this Sensex and Nifty Constituent Scrip
Cheers,”
7 thoughts on “BHEL @ Rs 220 and near it’s recent 52 Week Low looks interesting”
Hi Gaurav,
First of all …thanks a lot for the detailed analysis…. I have a question to you … u had told us to stay away from the markets through May and June …
can we enter in July??? Only thing that is preventing me from entering is the ongoing euro zone crisis…
I think I have a very attractive list with me(you recommeded most of these):
1. IDBI Bank
2. BHEL
3. Shree Renuka sugars
4. SAIL
Would love to know your thoughts on:
1. Kwality Dairy
2. Jubilant industries
Thank you very much Gaurav. Wow!! good analysis and logical explanations. Thank you.
Dear Sir,
Is it a good time for us to invest in PSU’s like Bhel,Coal India and BEL.With Government on the backfoot due to reforms not moving as expected , are we looking at a scenario where the Government will have to take bold reformist measures to put back the economy on the rails even if it means keeping populist announcements in the backburner. If reformist measures are forthcoming then we may see PSU divestment and even better performance from the PSUS vis a vis topline and bottomline.
Hi Guys,
Srikanth ~ For quite awhile now Markets have been unkind and taunting us to dare Enter ! ~ Therefore taking a strong cue of never to flirt with the wrath of Mother Nature likewise I have been wary of our Mother Market too ! ~ I would love Valuations to get even less riskier for ex PSUs BHEL to invite at @ Rs 175 or NTPC @ Rs 125 ! ~ Macro overhang is NOT going to clear soon,either globally or in India ~ However the Markets has already factored a large extent of macro risks already though I feel it yet needs to reflect some more ~ Stay True to your Risk Profile ~ Enter for the Long Term ~ Not too aggressively though now ~ keep some Cash
Salil ~ You are being Kind ~ Appreciate it ~ though my wife thinks I’m illogical and irrational!
Rohit ~ We Indians are Stock Addicts and have very poor memory ~ forget the last and every time we lost monies ! ~ we always keep the faith and live in Hope ! ~ I have my own take on these pending Reforms ~ I think we are being bullied to announce them ~ I think they will not solve our Economic Issues like the propaganda of those interests that are proposing the same want us to believe~ they are not a panacea ~but I do share your sentiment on PSU Disinvestment ~ BHEL was to disinvest 5% of govt equity last year ~ it may revive the thought later this year or next and bring about some buoyancy in the Share Price ~ likewise other PSUs ~ the government has already indicated a list where they would be considering PSU Disinvestment ~ but like other Promoters they too are Greedy and leave nothing on the table in the IPOs or FPOs,contrary to their boasts of Investor Protection and creating shareholder value ~Check my NHPC IPO Blog views ~ Lead Merchant Bankers Vallabh Bhansali of Enam and Uday Kotak of Kotak recommended NHPC for the long term at the IPO Price of Rs 36 ~You have Lost 50% in a couple of years had you invested ! ~ while they have in the meantime gained a few awards for contributing to our Capital Markets !!!! ~ Nothing Personal against them but be wary when Commercial and Vested Interests are being served and played out at your cost ! ~ Play PSUs on Valuation Merit
Thanks Gaurav ..
Thank You Sir for your valuable comments.
Hi Gaurav,
Seems all wives have same opinion that husbands are illogical and irrational !!!. I get solace I am not alone. 🙂
I would be grateful if you could share your opinion on two more stocks. One is Voltas and Second is Sanghavi Movers. I like both of them and seems they are battered out of proportion. is it the right time to start accumulating them?
Thank you,
Salil