Buy JSPL but avoid BHEL, says Dimensions Consulting

Srivastava told CNBC-TV18, " would still buy Jindal Steel & Power (JSPL) because all said and done the fact is that they are good quality company, the performance of the power plants is very good. You may argue about the benefit they got in the coal-gate and on the coal mining rights. But what is the legal remedy for that; you are going to impose future tariffs, future tariff you cannot afford to go below the economic price because you do not have power in any case. So what can it do to a company barring an intermediate disturbance in the share price, so yes, buy."

He further added, "BHEL is a bit of a problem because I do not know what is the order book all about, who are they executing for, who is going to pay for the stuff they keep delivering to State Electricity Boards (SEBs). The SEBs do not have money, banks do not have liquidity to give funding to SEBs - so where are they going to sell into and how will they fund it. There is a funding issue with BHEL model right now given the banking crises in the power sector, the coal-gate scam and the power utility companies and the SEBs. That’s why we will not buy BHEL, but otherwise nothing wrong with the stock; if the funding conundrum can be solved, it’s a good buy. I think JSPL is still a good buy because any steep correction because of this could get you on to a good fundamental stock."