BHEL hits highest level since May 2017; stock zooms 135% in last 8 months

Defence ministry has signed a Rs 2,956 crore contract with BHEL to procure 16 upgraded super rapid gun mount (SRGM) and accessories for Indian Navy.

Shares of Bharat Heavy Electricals Limited (BHEL) hit an over six-year high at Rs 164.60, as they rallied 5 per cent on the BSE in Wednesday’s intra-day trade backed by heavy volumes after signing of contract. The company today said that it signed a contract with Ministry of Defence (MoD) for 16 nos. super rapid gun mounts (SRGMs) against the Letter of Intent (LOI) received earlier in March 2023.

The stock of state-owned company was trading at its highest level since May 2017. Since April, the market price of BHEL has more-than-doubled or zoomed 135 per cent from level of Rs 70.13. A combined 51.27 million equity shares changed hands on the NSE and BSE so far today.

Defence ministry has signed a Rs 2,956 crore contract with BHEL to procure 16 upgraded SRGM and accessories for Indian Navy. The SRGM is a medium caliber anti-missile and anti-aircraft defence weapon system that provides a sustained rate of fire and high accuracy. These upgraded SRGMs will be installed onboard Indian Navy's in-service and newly built ships.

In a separate exchange filing BHEL on Tuesday announced that the company and Electricité de France S.A., France (EDF), a French state-owned company and largest nuclear operator worldwide, signed a Memorandum of Cooperation (MoC) to explore the opportunity to maximize the local content of the Jaitapur Nuclear Power Plant Project (6x1650 MWe) to be established by NPCIL in India.

Further, BHEL and EDF will also explore larger collaboration for the European Pressurized Reactors (EPRs) and for the NUWARD SMR (Small Modular Reactor), the company said.

Meanwhile, as on September 30, 2023, BHEL order book position stood at a solid of Rs 1.14 trillion. Of which, 72 per cent or Rs 82,673 crore was from power sector, while 24 per cent (Rs 27,810 crore) from industry and the remaining 4 per cent (Rs 3,942 crore) from exports, the company said.

BHEL received orders worth of Rs 33,479 crore in first half (April to September) of financial year 2023-24, as compared to Rs 12,310 crore orders bagged during the same period last fiscal. Fructification of diversification initiatives and revival of thermal power ordering led to robust order booking, the company said.

During Q1FY24, the BHEL won a milestone order of manufacturing 80 Vande Bharat trains in a Joint Venture with ‘Titagarh Wagans Limited’ where in BHEL’s has a significant share.

According to CARE Ratings, the outlook for BHEL is expected to be stable for the medium term backed by virtue of its strong financial flexibility on account of Government of India (GoI) holding of 63.17 per cent and the net external debt negative position of the company. Furthermore, healthy orderbook position with improved pipeline of thermal and industrial projects and increasing execution pace for the orders including revival of stuck orders shall continue to render stability to the risk profile of the company, the rating agency said in its rationale.

Although the orderbook remains concentrated towards the power segment, the ratings factor the company’s demonstrated efforts towards diversifying the orderbook beyond the power segment indicated by the year-on-year improving inflows of orders from the industrial projects segment. Furthermore, the ratings factor favourably the improved project pipeline in the thermal power segment for the medium term, CARE Ratings said.