BHEL Share Price Rating Reduced by Nomura; EBITDA and Margin Estimates Decreased
Nomura, a foreign brokerage firm, has lowered the rating of Bharat Heavy Electricals Limited (BHEL), a company owned by the Indian government. This move comes at a time when there is high hope for BHEL’s thermal power ordering in the market. Nomura has reduced the rating of BHEL’s shares from ‘Neutral’ to ‘Reduce’. Additionally, it has lowered the target price for the stock from Rs. 61 to Rs. 79.
Foreign Brokerage Firm’s Opinion on BHEL
Nomura has decreased the estimated operating profit (EBITDA) and operating profit margin of BHEL for fiscal years 2024 and 2025 by 13% and 4%, respectively. The reason for this reduction is due to the fluctuations in order inflow and weak gross margins.
Other Brokerage Firms’ Opinion on BHEL
Meanwhile, Nuveen Institutional Equities has maintained a ‘Hold’ rating for BHEL shares and increased its target price from Rs. 80 to Rs. 85. Prabhudas Lilladher, on the other hand, has increased its rating from ‘Sell’ to ‘Reduce’ and raised its target price from Rs. 36 to Rs. 67. ICICI Securities has given a ‘Buy’ rating to the stock and set a target price of Rs. 100.
BHEL’s Orders and Performance
Over the past year, BHEL’s shares have increased by 62%, whereas Nifty-50 has only grown by 12%. Nomura believes that BHEL’s strong performance is due to the expectation of a robust increase in thermal power ordering and an increase in cash flow. Recently, BHEL announced that it had received orders worth Rs. 23,548 crore for fiscal year 2023, which is 17% higher than the previous year. In April 2023, BHEL will surpass the order worth Rs. 1 lakh crore for the construction and maintenance of Vande Bharat Express trains, with the BHEL-TWL group receiving orders worth approximately Rs. 23,000 crore.
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