BHEL can move to Rs 300, says Tulsian

Tulsian told CNBC-TV18, "BHEL posted an EPS of Rs 29, so that makes the stock to rule at a PE multiple of close to about 7.5 and on a price to book it is ruling at 2 times with a book value of close to about Rs 105. Infact if you see historically the capital goods stocks have always ruled in the PE multiple of 15 to Rs 40. If I recall may be about a decade back may be in the year 2002 for a brief period of about couple of years at that time the share was ruling in the single digit. I don’t think that there is any reason for the stock to rule at such a low PE multiple. Infact as I said that the capital goods stocks if you take a case of ABB , Siemens , L&T , BHEL, Thermax , infact all these stocks have been ruling in the PE multiple of 15-35."

He further added, "They have posted Rs 48000 crore top line for FY12 and the big concern now has been on the order inflow that they are not getting the matching order inflow. But if I go by the order book, the company has of about Rs 135000 crore that is enough for them to take care of next 30 months of may be 2.5 years turnover. I don’t think that one can really rule out the possibility that the order inflow will really because the management has indicated that the order inflow for the current year is likely to be about 15000 megawatt and if you take a ballpark figure Rs 3 crore per megawatt that gives an order inflow of about Rs 45000 crore. That may slightly disappoint on the expected inflow addition to the companies order book but I don’t think that’s really a big concern."

"Considering again the financials debt free company, Rs 6500 crore cash in the book, 15 manufacturing plants and whenever we have these kind of pessimism prevailing for these kind of stocks, I think that is the best time to enter into the stock. Best case take the case of Wockhardt, it was ruling in the month of December, about 5 months back at Rs 280 and nobody was even really looking to buy that stock and today now it is ruling at Rs 800 and it is looking very good. So probably the technical factor has been dragging it down."

"I don’t think that a further downside can really be seen from hereon. We have been discussing that Rs 200 looks to be a strong bottom for the stock but yes purely for an investor with a 12 months horizon I think one can expect a price of Rs 300 or so."

Disclosure: Holding investments in BHEL.