Stocks to Buy: To control inflation, interest rates are being increased continuously by the US Fed. Its effect is being seen on the stock markets around the world. Heavy selling was also seen in the Indian stock markets. In the midst of this ongoing volatility in the market, many stocks are looking better for investment. In these, brokerage houses and analysts are giving investment advice. Brokerage house ICICI Securities has given buy advice on PSU stock Bharat Heavy Electricals. The brokerage has also increased the target price of this stock below Rs 100. The brokerage believes that the company is ready for revival, the benefits of which will be reflected in the share prices. So far this year, the stock has fallen by about 10 per cent.
Bharat Heavy Electricals: ₹100 Target Price
Brokerage house ICICI Securities has retained the buy rating on the stock of Bharat Heavy Electricals (BHEL) of the capital goods sector. Also, the target price has been increased from Rs 76 to Rs 100. The share price closed at Rs 55 on 26 September 2022. In this way, investors can get strong returns of up to 82 per cent from the current price. So far this year, the stock has fallen by about 10 per cent. The stock is trading at a discount of around 31% from its 52-week high. The stock made a 52-week high on the NSE on 13 October 2021 at Rs 80.35.
What is the opinion of the brokerage
ICICI Securities says that BHEL has improved execution during FY22 after the problems related to Kovid are over. Reduction in fixed cost and withdrawal of provisions pushed EBITDA into a positive mode of Rs 740 crore. However, the share of raw material cost in sales remains at around 72 per cent. The brokerage believes that the recent softening of commodity prices and higher operating leverage will lead to higher profits.
The brokerage says that in FY22, orders grew 76 percent year-on-year to Rs 23600 crore. In this, the order from the nuclear segment has been Rs 12000 crore. Till FY22, the order book of the company was around Rs 1 lakh crore. The Central Electricity Authority (CEA) recently said in the draft National Electricity Plan that an additional 43 GW of coal-based capacity will be added in the coming decade. Out of this, 25 GW is under construction and the rest will be awarded soon.
The brokerage firm says that our confidence in the company’s stock has further strengthened. This is because new coal plant orders in the coming years will give BHEL time to improve its non-power segment. In addition, we expect the industrial segment to pick up pace on the back of a better outlook. BUY advice remains intact on the stock with a revised target.
(Disclaimer: The investment advice here is given by the brokerage house. These are not the views of Zee Business. Please consult your advisor before investing.)