BHEL has been a winner in my clients portfolios for years now…..Spotted it when it was in three figures…then it gave a 1:1 Bonus too in 2007….It was my favourite in the Core Segment
….am getting strong vibes on BHEL yet again…..In 2010 BHEL did a lot right…Profits have zoomed…Orders are at a Record High…Outlook looks good…..the only problem was the Share Price….It’s currently Rs 2218 with a 52 Week High and Low of Rs 2695 and Rs 2060….the price range has not been spectacular….but I think this is about to change…
…..I sense 2011 and 2012 may just be different for BHEL….when it declared it’s third quarter December 31, 2010 results yesterday and for the nine months too in FY 11 with 34 % surge in profits yoy and Rs 158000 crs in orders,this feeling has been fortified and the famous crazy Govinda song came to mind…” Main toh raste peh jaa raha tha…main toh BHEL-puri kha raha tha….”….. Methinks you too should have some BHEL-puri in 2011…It’s going to get Sweeter and Spicier !…with all the fresh condiments and ingredients to make it Complete
Have a look at this uncomplicated table I’ve prepared and judge for yourselves
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BHEL (FV Rs 10) closed at Rs 2218 on BSE on January 21,2011
52 Week High/Low : 2695/2060
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Rs Crs
|
9 months December 31,2010 |
FY 10 |
Projected FY 11 |
Projected FY12 |
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Sales |
24756 |
34198 |
40000 |
50000 |
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PAT |
3213 |
4311 |
5500 |
7000 |
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|
Equity |
490 |
490 |
490 |
490 |
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Reserves |
|
15428 |
19400 |
24900 |
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Networth |
|
15918 |
19890 |
25390 |
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Debt |
– |
128 |
– |
– |
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EPS Rs |
|
88 |
112 |
143 |
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Book Value Rs |
|
325 |
406 |
518 |
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Dividend % |
|
233 |
250 |
275 |
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P/E Multiple |
|
25 |
20 |
15.5 |
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P/BV Multiple |
|
6.8 |
5.5 |
4.3 |
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Market Cap |
108551 |
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Capital Employed |
17345 |
12988 |
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Orders on hand |
158000 |
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Public Shareholding % |
32.28 |
32.28 |
32.28 |
32.28 |
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Capacity MW |
15000 expanding to 20000 |
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In 2010 BHEL has remained above Rs 2000 and in the Price Range of Rs 2100-Rs 2600…..more a defensive stock really……but I expect it to move upwards into the range of Rs 2500-Rs 3000 and then even Rs 3000-Rs 3500 next year as it moves towards an EPS level of Rs 150 and beyond for FY 13
So this is my simple advice….Don’t dare to short BHEL…In fact if it does drop towards Rs 2000 and maybe even below on macro concerns you should be considering buying more of it
But there will be Buyers and Sellers and therefore two conflicting views…..My View is a strong long in BHEL for the coming years….It’s available towards the 52 Week Low as indicated above
So Enjoy some BHEL-Puri in the Core Segment of your Equity Portfolio
Cheers !