Company Information
BHEL is the highest power equipment manufacturer, driven by capacity expansion, cost-optimization strategies and looking forward for newer technologies, thus likely to be more competitive in coming years thereby providing visibility for long-term growth.
Superiorities of the stock
- Tremendous growth visibility – with capacity expansion to 15 GW.
- Margin expansion on the cards – on conclusion of long term wage bill and operating leverage emancipating from expanded capacity.
- No serious competition likely over next five years.
- Healthy order book at Rs. 1.5 trillion or ~4.5x FY10 sales.
- Attractively valued at 17x FY12 earning on RoE of ~29%.
Key Delta Triggers
- Acceleration in new order inflows – JSPL, NTPC, State JVs.
- Improvement in execution
- Growth in new areas – transmission, railways.
Share Data (July 2010)
| Price | Rs. 2460/- |
| BSE Sensex | 18131 |
| Reuters code | BHEL.BO |
| Bloomberg code | BHEL IN |
| Market cap. (US$mn) | 25670 |
| 6M avg. daily turnover (US$mn) | 31 |
| Issued shares (mn) | 490 |
| Performance (%) | 1M | 3M | 12M |
| Absolute | 1 | (1) | 13 |
| Relative | (1) | (3) | (5) |
Valuation ratios
| Year upto 31 Mar. | FY11E | FY12E |
| EPS (Rs.) | 116 | 114 |
| +/- (%) | 31.7 | 21.6 |
| PER (x) | 21.2 | 17.4 |
| PBV (x) | 5.9 | 4.7 |
| Dividend/Yield (%) | 1 | 1 |
| EV/Sales (x) | 2.8 | 2.2 |
| EV/EBITDA (x) | 13.4 | 10.9 |
Major shareholders (%)
| Promoters | 68 |
| FIIs | 15 |
| MFs | 7 |
| BFSI’s | 4 |
| Public & Others | 6 |