BHEL shares up 29% this week. Nuvama raises stock price target to Rs 156

Shares of BHEL climbed 12 per cent in Friday's trade, taking its winning run to the fifth straight day, thanks to a flurry of order inflows including a Rs 4,000 crore order from NTPC this week. For the day, the stock jumped 12.2 per cent to settle at Rs 136.10. It was up 29.24 per cent for the week.

Nuvama Institutional Equities sees fresh thermal ordering over the next four–five years at 30 GW and said BHEL could bag 50 per cent of those orders. It noted that the NTPC’s Lara Stage-II (2 x 800MW) supercritical thermal project, could take BHEL's year-to-FY24 order inflow to Rs 30,000–34,000 crore (against Rs 23,500 crore in FY23).

"With peak power demand/deficit exceeding 230/8.5GW (as on 29 August), the case for accelerated thermal capex – outlined in the NEP – is stronger," it said.

In its base case, Nuvama sees 3GW per year of thermal order inflow for BHEL, in addition to the base order inflows of Rs 15,000–20,000 crore, potentially driving an EPS CAGR of 83 per cent over FY23–26E. "We are raising FY25/26E EPS by 24 per cent/25 per cent, yielding an increased target of Rs 156 (discounted to Mar-25E; earlier Rs 125)," Nuvama said.

Nuvama noted that BHEL is one of the only two active suppliers for thermal BTG (L&T the other one) and that 70–75 per cent of BHEL’s revenue comes from the power segment (85 epr cent in peak cycle). Even in a down-cycle with no thermal ordering, BHEL maintained an annual order inflow of Rs 12,000–15,000 crore and sees new orders to only add to the base.

Disclaimer: The content of this webpage is not an investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product(s). It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial circumstances. Investment involves risk. You should refer to the offering documentation of the product(s) for detailed information (including risk factors) prior to investing in any product(s). If you have any queries on the discussed subject matter, you should seek independent professional advice. Business Today does not guarantee, vouch for, endorse any of its contents and hereby disclaims all warranties, express or implied, relating to the same.