BHARAT HEAVY ELECTRICALS LIMITED

 

Bharat Heavy Electricals Limited - COMPANY PROFILE

Bharat Heavy Electricals Limited (BHEL) is an integrated power plant equipment manufacturer and one of the largest engineering and manufacturing companies in India in terms of turnover.

Bharat Heavy Electricals Limited (BHEL) manufactures a wide range of products and services for the core sectors of the Indian economy, including power, transmission, industry, transportation, renewable energy, oil & gas and defence. Bharat Heavy Electricals Limited (BHEL) has been earning profits continuously since 1971-72 and paying dividends since 1976-77. BHEL undertakes all jobs related to the construction, designing, engineering and testing of its products all the way to commissioning and servicing. The Company currently operates at more than 150 project sites across In- dia and abroad and has a wide presence with 16 manufacturing divisions, 2 repair units, eight service centres, eight overseas offices, 7 joint ventures and 15 regional centres.

Bharat Heavy Electricals Limited (BHEL) accounts for 59% of the total installed capacity of around 1,80,000 MW in the utility sector across India as of 31 March 2012 and it accounted for approximately 69% of the total electricity generated during the year 2011-12. BHEL’s global references are spread across 75 countries. The cumulative overseas installed capacity of Bharat Heavy Electricals Limited (BHEL) manufactured power plants exceeds 9,000 MW across 21 countries

 

Bharat Heavy Electricals Limited - STOCK INFORMATION

STOCK PRICE

276

TARGET PRICE

285-295

SECTOR

INFRASTRUCTURE

SYMBOL (AT NSE)

BHEL

ISIN

INE257A01026

FACE VALUE (IN RS.)

2.00

BSE CODE

500103

 

Bharat Heavy Electricals Limited - STOCK FUNDAMENTALS

MARKET CAP

67,357.95

BOOK VALUE

135.02

EPS - (TTM) (IN RS. CR.)

9.71

P/E

28.34

INDUSTRY P/ESHAREHOLDING PATTERN

20.54

 
Bharat Heavy Electricals Limited - INVESTMENT RATIONALE

Bharat Heavy Electricals Limited (BHEL) is strongly exposed to cyclical factors: i) Contribution margins at ~42% vs EBIDTA margin of 12% (adjusted) in FY14, leading to a meaningful operating leverage ii) Core NWC stable at 200 days; cyclical factors of Retention money (at 181 days in FY14 vs 55-60 days in FY07-09) and customer advances (deteriorated from 63% of revenues in FY09 to 38% in FY14) that impacted reported NWC are expected to normalize, as we expect BTB to increase from 2.6x currently to 3x in FY15. We expect Operating Cash Flows to improve from average of ~INR20b in FY10-13 to INR77b in FY15/16E.

 
Bharat Heavy Electricals Limited - SHAREHOLDING PATTERN

BHEL Image

 
OUTLOOK AND VALUATION

Net cash is likely to increase from INR92b in FY14 to INR252b in FY17E (~46% of current market cap). Even in FY14, operating cash flow had improved to INR54.2b vs INR24.4b in FY13. We expect BHEL to report EPS of INR10.2 in FY15E/ INR14.6 in FY16E / INR19.5 in FY17E. At the CMP, the stock quotes at PER of 21.6x FY15E / 15.1x FY16 / 11.3x FY17E. We maintain Buy with a price target of INR 295/sh (PER of 20x FY16E.

 
RESULTS (Quarterly )(Rs CR.)

 

DEC' 14

SEP' 14

JUN' 14

MAR 14

DEC' 13

Sales

6,197.96

6,144.02

5,154.97

15,031.5

8,634.85

Operat- ing profit

293.80

291.55

217.92

2,733.38

985.94

Interest

5.23

12.62

47.27

47.93

32.28

Gross profit

562.67

475.05

518.44

2,974.32

1,244.44

EPS (Rs)

0.87

0.51

0.79

7.54

2.84

TECHNICAL VIEW

BHEL Tech View

Bharat Heavy Electricals Limited (BHEL) is looking strong on charts. We advise to buy around 265-275 with stoploss of 248 for the targets of 285-295 levels. RSI is also showing upside momentum in it on daily charts.

SYMBOL

VALUE

ACTION

RSI(14)

73.736

BUY

STOCH(9,6)

82.686

OVERBOUGHT

STOCHRSI(14)

90.756

OVERBOUGHT

MACD(12,26)

4.080

BUY

ADX(14)

45.578

BUY

WILLIAMS %R

-4.381

OVERBOUGHT

CCI(14)

123.0701

BUY

ATR(14)

3.2393

HIGH VOLATILITY

HIGH/LOWS(14)

7.3893

BUY

ULTIMATE OSCILLATOR

69.794

BUY

ROC

5.947

BUY

BULL/BEAR POWER()13

12.5260

BUY

BUY: 8 SELL:0 NEUTRAL: 3

SUMMARY : STRONG BUY

Our Other Recommendation for Next Week

SCRIP

ACTION

CMP

ENTRY

SL

TGT

TIME FRAME

APOLLO HOSP

BUY

1341.05

1320-1345

1295

1375-1420

ONE WEEK

DIVIS LAB

BUY

1694.55

1680-1700

1650

1740-1790

ONE WEEK

HCL TECH

SELL

2005.90

2000-2025

2060

1960-1920

ONE WEEK

CROMPTON GREAVES

BUY

180.45

175-180

170

185-190

ONE WEEK

APOLLO TYRE

SELL

183.60

185-188

192

182-178

ONE WEEK

Performance of Previous Week

SCRIP

LOT

ACTION

ENTRY

SL

TGT

P&L

REMARK

CLOSE/LOW/HIGH

ITC

1000

BUY

370-375

360

380-395

25000.00

BOTH TGT HIT

396.50 / 402.50

BANK OF INDIA

1000

SELL

250-255

265

240-225

25000.00

BOTH TGT HIT

239.45 / 225.45

UNION BANK

1000

SELL

190-195

200

185-180

10000.00

BOTH TGT HIT

180.45 / 173.15

PFC

1000

BUY

278-282

274

286-290

-4000.00

SL TRG

278.95 / 270.25

GLENMARK

500

BUY

740-750

720

770-790

25000.00

BOTH TGT HIT

787.90 / 799.90

MOTHERSON SUMI

500

SELL

430-440

450

420-405

-5000.00

SL TRG

478.05/ 432.95

NET PROFIT

 

 

 

 

 

76000.00

 

 

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DISCLAIMER

This report is only for the information of our customers. Recommendations, opinions, or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. ATS and/or its group companies do not as assume any responsibility or liability resulting from the use of such information.

 

 

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