Have some BHEL-Puri in 2011 at Rs 2218…..Sweet & Spicy

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

 

BHEL (FV Rs 10) closed at Rs 2218 on BSE on January 21,2011

 

52 Week High/Low : 2695/2060

Scrip Name

52W v/s LTP

LTP

BHEL

 <-I—–>

2217.50

 

 

Rs Crs

 

9 months December 31,2010

FY 10

Projected FY 11

Projected FY12

Sales

24756

34198

40000

50000

PAT

3213

4311

5500

7000

Equity

490

490

490

490

Reserves

 

15428

19400

24900

Networth

 

15918

19890

25390

Debt

128

EPS Rs

 

88

112

143

Book Value Rs

 

325

406

518

Dividend %

 

233

250

275

P/E Multiple

 

25

20

15.5

P/BV Multiple

 

6.8

5.5

4.3

Market Cap

108551

 

 

 

Capital Employed

17345

12988

 

 

Orders on hand

158000

 

 

 

Public Shareholding %

32.28

32.28

32.28

32.28

Capacity MW

15000 expanding to 20000

 

 

 

 

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 read more