Bharat Heavy Electricals Ltd, or BHEL, is a government-owned company that manufactures all kinds of power plant equipment. BHEL caters to different sectors like power, transportation, industry, renewable energy, oil, gas, and defense.
About 76% of their income comes from making all sorts of power plant equipment, like stuff for thermal, gas, hydro, and nuclear power projects.
The company also provides different products to defense, aerospace, and transportation industries like captive power plants, which together make up the remaining 24% of their revenue.
BHEL also operates in 88 countries on six continents worldwide generating 8% to 10% of its revenue from exports.
Now you have got an overview of BHEL’s business. Let’s discuss what could be BHEL’s share price target by 2023 year-end.
BHEL Share Price Target 2023 and 2024
BHEL’s impressive one-year return of 104% has drawn the attention of investors.
BHEL’s current share price is trading between Rs 125 to Rs 130.
Stock market experts are expecting it to grow to around Rs 150 by the end of 2023. Some experts are predicting BHEL’s stock price to touch Rs 180 by the end of 2024.
Now, you can explore the article to know the reasons for this poor expected growth in the near future.
Fundamental Analysis of BHEL
#1. Revenue Growth
Over the past five years, BHEL’s revenue growth has been topsy-turvy. In fact, you can see a negative trend in revenue generation which is around -4% during this period. This inconsistent revenue growth indicates that the stock’s bull run can be over anytime.
|Financial Year||Revenue (in Rs in Crores)||Revenue Growth|
#2. Profit Growth
BHEL’s profit growth journey is also not very smooth. Over the last three years, you can see a positive growth of 32% which is really good.
But if you check out 5-year profit growth, it stands around -2% which presents a challenging situation.
|Year||Profit (in Crores)|
The main reason why BHEL is making little money is because its sales volumes are low, but operating costs are high.
If you look at the numbers from 2013 and compare them to 2023, you’ll see that BHEL’s sales have gone down by half, but the expenses such as manufacturing costs and employee costs have gone up a lot. This big difference between what they earn and what they spend is causing BHEL to lose money.
#3. Peers Comparison
BHEL has outperformed its competitors like ABB and CG Power and Industries in the last year’s returns. You can check out the stock return comparison below.
|Stock Name||1-yr Return|
However, when you compare BHEL’s major fundamentals such as revenue growth, profit growth, and debt to those of its peers, you can observe a consistent performance among its competitors as compared to BHEL.
You can check out the major competitors’ list below –
Even another competitor Suzlon Energy has a similar story, you can check out Suzlon Energy’s share price article to analyse the stock. Suzlon has given 163% return in 1-year but their revenues and profitability are somehow similar to BHEL.
BHEL’s Technical Analysis
I. Moving Averages
BHEL’s 50-day moving average (DMA) is at Rs 110, while the 200 DMA stands at Rs 90. This means when the trading price is above both the 50 and 200 DMA, it typically indicates a bullish trend because the stock has been performing well in the past.
Moving on to oscillators, we have the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD). Currently, the RSI is at 78.58, while the MACD is at 14.77.
7 Neutral and 3 Sell Oscillators show that BHEL’s stock is in an overbought condition. While this might sound a bit intimidating, it could also mean that the stock has been performing exceptionally well recently and reached the overbought zone.
Factors that May Shape BHEL’s Growth
- Government Policies: Keep an eye on any government policies related to the power and infrastructure sectors. These policies can have a significant impact on BHEL’s projects and revenue.
- Industry Trends: Stay informed about the latest trends in the power generation and transmission industry. Technological advancements and shifts in energy sources can affect BHEL’s business.
- Global Economic Conditions: The global economy plays a role in BHEL’s growth as well. Economic stability and demand for energy-related products and services can influence the company’s performance.
According to experts, BHEL’s share price target for 2023 year end could be Rs 150 due to slow sector growth.
You have now understood the reasons of expected lower return on investment.
However, always remember that the stock market can be unpredictable, so it’s essential to conduct thorough research and consider your own investment goals and risk tolerance.
You can also read about other energy stocks’ target prices –
- Tata Power Share Price Target
- Adani Power Shares Target Price
- Ratan Power Share Price Target
- JP Power Share Price Target
Nothing is safe in stock market. All investments carry some level of risk, you should do your proper research before investing in stock market.
To buy BHEL shares, you’ll need to open a demat account with a stockbroker, complete the necessary documentation, and place an order through your broker’s trading platform. It’s a straightforward process, and your broker can guide you through it.