Bharat Heavy Electricals Limited (BHEL) has secured a substantial order worth over Rs 6,100 crore from NTPC, India’s largest energy conglomerate, for setting up a supercritical thermal power project in Chhattisgarh. The project is part of the larger expansion efforts in India’s energy sector, aimed at boosting power generation capacity to meet rising demand. The contract awarded to BHEL involves a comprehensive engineering, procurement, and construction (EPC) package for the 1×800 MW Sipat Supercritical Thermal Power Project, Stage-III, located in Bilaspur, Chhattisgarh.
BHEL, with its extensive experience in power plant construction, is expected to complete the project within 48 months from the date the award is officially notified. This project is critical for NTPC, which continues to be a leader in India’s energy sector, operating across the entire power generation value chain. NTPC’s collaboration with BHEL highlights the trust the nation’s largest power generator places in BHEL’s capabilities in delivering complex and large-scale infrastructure projects.
As of June 30, 2024, the Government of India holds a 51.10% stake in NTPC, demonstrating its strategic importance in India’s energy infrastructure. Meanwhile, BHEL, also a state-owned enterprise, is involved in a broad range of activities, from designing to commissioning various products and services in critical sectors of the economy, particularly energy. The Government of India holds a 63.17% stake in BHEL, reflecting its position as a key player in the country’s development, especially in terms of industrial and infrastructural growth.
Analysts Recommend Buying BHEL Shares for Short-Term Gains
Following the announcement of this major NTPC order, analysts have expressed optimism about BHEL’s stock performance in the near term. LKP Securities, a leading domestic brokerage firm, recommended investors buy BHEL shares, setting a short-term target price of Rs 288 per share. The firm also advised maintaining a stop loss at Rs 254 per share. Analysts view this order as a significant win for BHEL and expect it to strengthen the company’s financial outlook over the next few years.
A R Ramachandran, an independent SEBI Research Analyst, observed that BHEL appears oversold and is exhibiting slight bullish tendencies on the daily charts. According to Ramachandran, there is strong resistance at Rs 269.8. If the stock closes above this level, it could pave the way for a near-term target of Rs 305. On the downside, support is expected around Rs 257.85. This analysis suggests that while BHEL has faced some selling pressure in recent months, it is likely to recover and could offer investors attractive returns in the short term.
On Friday, September 20, 2024, BHEL shares rose by 3.50% to close at Rs 266.15, while NTPC saw a modest 0.04% increase, with shares closing at Rs 424.15. The market response indicates positive sentiment towards BHEL following its latest win, with the potential for further stock price appreciation as the company’s order book continues to grow.
BHEL Dividend and Shareholding Overview
In addition to its recent order success, BHEL has maintained a consistent dividend policy. According to a filing with the Bombay Stock Exchange (BSE) on July 19, 2024, BHEL has set Friday, August 9, 2024, as the “Record Date” to determine shareholder eligibility for a final dividend. The final dividend for the financial year 2023-24 is Rs 0.25 per share, representing 12.5% on the paid-up equity share capital.
Since August 27, 2001, BHEL has declared a total of 38 dividends, underscoring its commitment to returning value to shareholders. In the past year, BHEL distributed a dividend of Rs 0.25 per share. With a current share price of Rs 266.15, the dividend yield stands at 0.09%. While the yield may seem modest, BHEL’s stock performance and long-term potential for growth make it an attractive investment for those seeking capital appreciation.
The company’s shareholding pattern remains robust. As of the June 2024 quarter, promoters’ holdings in BHEL were stable at 63.17%. Notably, foreign institutional investors (FII/FPI) increased their holdings from 8.76% to 9.10%, with the number of FII/FPI investors rising from 469 to 535 during this period. However, mutual funds decreased their holdings from 5.75% to 5.36%, and institutional investors as a whole saw a slight drop in their stake, from 24.71% to 24.13%.
BHEL Stock Performance and Future Outlook
Over the past 52 weeks, BHEL shares have experienced significant volatility. The stock reached a high of Rs 335.40 on July 9, 2024, and hit a low of Rs 113.50 on October 26, 2023. Despite a decline of over 9% in the past three months, BHEL’s stock has gained 18% over the last six months. When viewed over a two- and three-year horizon, the company’s shares have surged 342% and 391%, respectively. Long-term investors have seen substantial gains, with the stock soaring 431% over the past five years.
BHEL’s strong stock performance reflects its strategic importance in India’s energy and infrastructure sectors. Established in 1964, BHEL is one of the largest engineering and manufacturing companies in the country. It has played a crucial role in promoting self-reliance through the Aatmanirbhar Bharat initiative. BHEL holds the prestigious MAHARATNA status, granted by the Government of India, which recognizes its pivotal role in national development and its ability to undertake significant projects both in India and abroad.
In conclusion, BHEL’s recent order from NTPC, combined with its strong financial performance and market outlook, makes it a compelling stock for both short-term traders and long-term investors. With continued support from the government and its pivotal role in energy infrastructure, BHEL is poised to maintain its growth trajectory in the years to come.
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