_*Trading Levels (Positional)*_
SL</>1 FROM SLR
CMP
BHEL SPOT 211
T1 T2 T3 T4 T5 T6 T7 SLR
Strong > 210 220* 228* 236 243 250-58*
270-77 288-300 <205
Weak < 205 200* 192* 182-72 167 145 135-25
108-100 >210
Note: For Bhel, 200-192 is a strong demand zone and consecutive closing
below 192, it may crash to 145 or lower in the worst bear case scenario.
_*
*_ _*Some points or rationale behind Bhel:*_
For the last few days Bhel was under pressure because it was forced to
suspend work at Ennore plant (TN) following the Chennai HC order (upon a
petition by a consortium of rival companies along with its China partner
against the bidding mechanism).
This could affect the revenue growth of Bhel to some extent and the
whole bidding process followed by it. Lately, Bhel was struggling with
the new competitive bidding process and some of the recent big projects
were awarded to it by mutually negotiated terms. Though, this is
affecting Bhel in the short term, being a PSU backed by strong expertise
and financial metrics, it will be always preferred by state runs power
distribution companies. In any way, Bhel can always approach the SC
against the order of the HC as par its available legal rights and get a
stay of the same.
Its a fact that Bhel's recent financial performance has been dragged by
slow movement of orders in hand and lengthy billing cycles. It also
reflect the dismal state of capital goods sector, project delays and
cost over runs & "unhurried reforms" in India. Land is also an issue
here for power generation & distribution companies.
While the current situation is definitely gloomy, a gradual recovery in
economy in H2FY16 (as widely expected) and the Govt's focus on
infrastructure, "Smart City" likely to be positive factors for Bhel.
Looking ahead, Bhel has already good order books and on margin front
also, the management is confident because of its huge capacity & scale.
The order book is expected to be robust led by a combination of
competitive & negotiated bidding. Apart from various projects in power
sector, Bhel is also expected to get some big projects in high speed
trains (along with collaboration from Japanese companies) and in defense
(submarines & naval guns).
With expected pick up in the execution of the pending projects and
Govt's increased spending in infrastructure along with much awaited
power sector reforms, we may see substantial improvement in the Bhel's
cash flow in the coming days.
Considering the above expected IIP data released yesterday (although
there is some lower base effect) and all the above bad news for, we may
say that worst is almost over for capital goods sector including Bhel.
Also, Govt may further divest its stake in Bhel (by OFS) in the near
future and being a PSU "Navratna", it ma not allow it to " sell " cheap.
As par BG metrics of Techno Funda Valuation: (as par current market
parameters)
Current estimated median value of Bhel: 230
Projected fair values might be: 300-360-430 (FY:16-18)
SCRIP EPS(TTM) BV(Act) P/E(AVG) LV SV MV
200-DEMA 10-DEMA
BHEL 5.15 140.82 43.11 234.24 219.23 226.74 247.14 216.48
BHEL 8.7 147.9 43.11 304.45 284.94 294.70 247.14 216.48
BHEL 12.55 155.25 43.11 365.66 342.23 353.95 247.14 216.48
BHEL 18.25 163.05 43.11 440.95 412.70 426.82 247.14 216.48
_*Technical Charts:*_
<http://3.bp.blogspot.com/-VRgdzwpWUMY/VfOuedCJwoI/AAAAAAAAD9w/loJnOBGScng/s1600/Bhel-11-09-2015.png>
<http://4.bp.blogspot.com/-mo87JbA09qw/VfOugpRGi9I/AAAAAAAAD94/Ua-AnW6SscU/s1600/Bhel-Fibb-11-09-2015.png>
<http://1.bp.blogspot.com/-hbf3B9_k8R4/VfOuikd0-SI/AAAAAAAAD-A/2d7HOLQ0Orw/s1600/Bhel-Wk-11-09-2015.png>
<http://3.bp.blogspot.com/-bnDfuz8nRIk/VfOulys_lLI/AAAAAAAAD-I/Njmr_1yDT4c/s1600/Bhel-TL-11-09-2015.png>
<http://4.bp.blogspot.com/-Ggu8-QebzY0/VfOurIJs0JI/AAAAAAAAD-Q/7AtPWfLRajk/s1600/Bhel-Pattern-11-09-2015.png>
<http://2.bp.blogspot.com/-0ElpxANynFM/VfOutqVNa2I/AAAAAAAAD-Y/hN3Th2QGwFU/s1600/Bhel-TL-LT-11-09-2015.png>
--
Thanks & Regards,
Asis Ghosh
(asisghosh.blogspot.com)
NCFM-TA Certified
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