Buy Bharat Heavy Electricals; target of Rs 370: ICICI Securities

ICICI Securities research report on Bharat Heavy Electricals

Thermal equipment ordering is scaling the summit. In our view, it would be overly hasty to write an obituary for thermal or coal-based power yet. We posit, the need to add reliability to the grid has led policymakers to push the pedal on the addition of new thermal power plants. As a result, developers are swiftly finalising and awarding equipment orders. In parallel, the largest coal-based player (NTPC) is on the ready to add another 26GW of new coal-based power; the largest private player has already placed an order for 11GW of coal-based equipment. In entirety, this is fuelling order inflow (OI) for BHEL. Note – BHEL has already announced OI of INR 364bn and is L1 in another 3.2GW (estimated at INR 200bn). As a result, we estimate OI of INR 1trn in FY25 for BHEL. Retain BUY; unchanged TP of INR 370.

Outlook

BHEL continues to benefit from an improving outlook for coal-based capacity addition. We maintain BUY with an unchanged TP of INR 370 per share.