Stock Idea - Bharat Heavy Electricals

Recommendation: Buy

CMP = Rs 2,236

Price target: Rs 2,450

Key points:

·         During the past few days we have seen positive news flowing in for Bharat Heavy Electricals Ltd (BHEL). Hereby we bring to you the highlights and the implications for the company in the future.

·         BHEL is close to winning its first order for super-critical boilers for National Thermal Power Corporation's (NTPC) Barh-II project. This could well be a break through for the company in the super-critical boiler space.

·         The company is in talks with global power equipment firms Siemens, Areva, and General Electric (GE) to set up a joint venture (JV) in the country to manufacture nuclear power plant equipment. The proposed JV will give BHEL a head start in the competition after the nuclear power market in India opens up with the operationalization of the Indo-US nuclear deal.

·         The company plans to scale up its manufacturing capacity to 20,000 megawatt (MW) per annum by 2012 at an investment cost of Rs 6,500 crore.

·         BHEL is considering taking equity in the Koradi Thermal Power Station near Nagpur, Maharashtra. The plant would undergo a 1,600MW expansion in the generation capacity based on super-critical technology and would involve a capital outlay of Rs 8,000 crore.

·         The future of the stock looks very promising and hence I am maintaining Buy call on this scrip.