BHEL @ Rs 220 and near it’s recent 52 Week Low looks interesting

Thought I should reproduce my brief response to Salil’s query on BHEL for wider and easier visibility reading

 

Price Movement ( www.bseindia.com)

 

“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The Government had intended to divest 5% and BHEL had even filed a DRHP with SEBI in September 2011 which it has since withdrawn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,”