Bharat Heavy Electricals Ltd. (BHEL) Sees Significant Gains and Institutional Interest

Bharat Heavy Electricals Ltd. (BHEL), a prominent Indian central public sector undertaking, has been making headlines with its recent market performance and significant institutional interest. The company, which is the largest government-owned electrical industrial technology firm in India, has seen its market capitalization rise substantially.

Market Capitalization and Institutional Gains

In the last week, BHEL's market capitalization rose by 75 billion, with the state or government, which holds a 63% stake, profiting the most from this increase. Institutions, which own about 20% of the company's shares, also benefited significantly from the rise in stock price. This surge in market cap highlights the strong institutional and governmental support for the company.

Technical Analysis and Trading Strategies

From a technical perspective, BHEL shares have shown promising signs after a recent correction. The stock has broken out of its consolidation phase and is expected to rise based on technical parameters. Brokerage firms suggest that the stock could potentially reach 288 in the near to short term, provided it sustains above the 265 level. A drop below 254, however, may push the stock back into consolidation.

BHEL has rallied significantly over the past 18 months, rising from 64 to 332. Despite a 21% correction from its recent highs, the stock remains a multibagger, having doubled investors' wealth from its 52-week lows. The company's Q1 results, although weaker than expected, have not deterred analysts from maintaining a positive outlook on the stock.

Fundamental Performance and New Contracts

On a fundamental basis, BHEL reported a consolidated net loss of 211.40 crore for the June quarter, largely due to higher expenses. However, revenue from operations increased by 9.6% to 5,845 crore during the same period. The company also boasts an orderbook of around 1,31,600 crore as of April 1, 2024. Recent contracts, including a 11,000 crore contract for three supercritical power projects from Adani Power and a 10,000 crore project from Damodar Valley Corporation, further bolster its financial outlook.

The strong orderbook and new contract wins are indicative of BHEL's robust growth potential. Analysts from firms like Antique Stock Broking have given BHEL a target price of 365 with a 'buy' rating, reflecting optimism about the company's future performance.