Global brokerage firm CLSA has reiterated its ‘Underperform’ rating on state-run Bharat Heavy Electricals Ltd. (BHEL), raising its price target from ₹189 to ₹205 per share.

CLSA’s revised target suggests an 8% potential downside from BHEL’s closing price on Wednesday.

The foreign brokerage highlighted that BHEL is capitalising on a decade-long opportunity in the resurgence of fossil fuels.

The state-run company’s recent NTPC tender win represents 16% of forecasted FY25 cash inflows, with a valuation pegged at 40 times the estimated earnings per share for FY26.
However, CLSA added that BHEL’s elevated valuation has adjusted somewhat but remains high.

BHEL has emerged as the successful bidder for a major contract from NTPC Ltd., it said in an exchange filing on November 12.

The contract is for the establishment of the main plant package of 3X800 MW Telangana Stage-II supercritical thermal power plant.

Until this order win, the state-run company had contributed to over 57% of NTPC’s thermal power installations across India. BHEL has 1,68,000 MW of utility power capacity installed across the country.

Out of the 17 analysts that track BHEL, nine of them have a ‘Sell’ rating on the counter with price targets ranging to as low as ₹61, to as high as ₹371.

Shares of BHEL opened lower on Thursday at ₹222.36. The stock has risen 12% so far in 2024. The stock has corrected 36% from its recent peak of ₹335.