Macquarie Capital puts 'buy' on BHEL

CMP: Rs 1,374.10
Target price: Rs 1,935
Macquarie Capital has initiated coverage on Bhel with a ‘buy’ rating, citing reduced input prices, and likely margin expansion as key triggers. According to the brokerage, heavy engineering major’s expansion plans at its Trichy, Haridwar, Bhopal and Hyderabad plants are on track. These four plants account for 65% of Bhel’s revenues. Most of the current large order book of around Rs 1.1 trillion for Bhel comprises orders for FY3/08 and FY3/09. “These orders would not require balance of plant equipment in the next 12-18 months, which implies that any intermittent shortage would not halt the entire process,” a Macquarie note to clients said.
Source: ET