Should you buy BHEL shares post Adani Power order? Here are target prices
BHEL has meaningfully re-rated over the last one year, but Antique believes that the stock is inexpensive and has potential to rerate further.
- Aug 27, 2024,
- Updated Aug 27, 2024 9:15 AM IST
Stock market analysts are largely positive on the Bharat Heavy Electricals Ltd (BHEL) order book, following its Rs 11,000 crore contract agreement with Adani Power Ltd for setting up of three Supercritical Thermal Power projects in Rajasthan and Madhya Pradesh. They do differ on the PSU stock's valuations.
Antique Stock Broking said thermal power plant order finalisation has witnessed a sharp uptick in FY25 with Rs 28,000 crore worth of orders getting finalised in the power sector.
This brokerage had upgraded BHEL to 'Buy' on April 17, arguing that its annual average order inflow over FY24-27 will cross Rs 60,000 crore. "This is getting played out since FY24", it said adding that the ordering momentum should continue, given the large order pipeline in the power sector coupled with robust business opportunities expected to materialise in the fast-growing sectors such as railways, defence, and renewable energy.
"We expect a cumulative order inflow of Rs 2.2 lakh crore over FY24-26E, which coupled with the accelerated execution of the existing order book of Rs 1.4 lakh crore to significantly improve BHEL's operational performance leading to a potential 156 per cent earnings CAGR over FY24-27E," Antique Stock Broking said.
The BHEL stock has meaningfully re-rated over the last one year, yet Antique believes that the stock is inexpensive and has potential to rerate further, Antique said as it maintained 'Buy' recommendation on BHEL with a target price of Rs 360, based on a PE of 32 times its H1FY27 estimates.
Prabhudas Lilladher said year-to-date order intake for BHEL now stands at Rs 31,300 crore. The stock is currently trading at PEs of 85 times and 28 times on estimated FY25 and FY26 earnings per share, it said adding that it maintained a 'Reduce' rating on BHEL with a target price of Rs 264. Kotak Institutional Equities has a 'Sell' rating on the BHEL stock with a fair value of Rs 100.
BHEL booked an average of Rs 27,400 crore orders during FY12-23. "Earnings could grow exponentially over the next three years, given strong operating leverage," Antique said.
Stock market analysts are largely positive on the Bharat Heavy Electricals Ltd (BHEL) order book, following its Rs 11,000 crore contract agreement with Adani Power Ltd for setting up of three Supercritical Thermal Power projects in Rajasthan and Madhya Pradesh. They do differ on the PSU stock's valuations.
Antique Stock Broking said thermal power plant order finalisation has witnessed a sharp uptick in FY25 with Rs 28,000 crore worth of orders getting finalised in the power sector.
This brokerage had upgraded BHEL to 'Buy' on April 17, arguing that its annual average order inflow over FY24-27 will cross Rs 60,000 crore. "This is getting played out since FY24", it said adding that the ordering momentum should continue, given the large order pipeline in the power sector coupled with robust business opportunities expected to materialise in the fast-growing sectors such as railways, defence, and renewable energy.
"We expect a cumulative order inflow of Rs 2.2 lakh crore over FY24-26E, which coupled with the accelerated execution of the existing order book of Rs 1.4 lakh crore to significantly improve BHEL's operational performance leading to a potential 156 per cent earnings CAGR over FY24-27E," Antique Stock Broking said.
The BHEL stock has meaningfully re-rated over the last one year, yet Antique believes that the stock is inexpensive and has potential to rerate further, Antique said as it maintained 'Buy' recommendation on BHEL with a target price of Rs 360, based on a PE of 32 times its H1FY27 estimates.
Prabhudas Lilladher said year-to-date order intake for BHEL now stands at Rs 31,300 crore. The stock is currently trading at PEs of 85 times and 28 times on estimated FY25 and FY26 earnings per share, it said adding that it maintained a 'Reduce' rating on BHEL with a target price of Rs 264. Kotak Institutional Equities has a 'Sell' rating on the BHEL stock with a fair value of Rs 100.
BHEL booked an average of Rs 27,400 crore orders during FY12-23. "Earnings could grow exponentially over the next three years, given strong operating leverage," Antique said.