Buy BHEL at Rs 120-125, says Rajesh Agarwal

Rajesh Agarwal of Eastern Financiers told CNBC-TV18, "Bharat Heavy Electricals (BHEL) margins would be under pressure, things are not going to improve in the next two-three quarters at least. However, considering the fact that it is one of the biggest operator in the country with around 14 plants and eight service centers with a capacity of 20,000 megawatt, I think once things start improving BHEL would be one of the biggest beneficiary and the biggest solace comes from the kind of order book. And as long as it is above Rs 1 lakh crore, I don't think there is much of a concern left. Even in October they have secured some orders."

"On valuation parameters if you look at the valuation the P/E is around six and price to adjusted book value of 1.2. I think the worst is behind BHEL and somebody who is ready to hold for one year or 18 months down the line, I wouldn’t be surprised if one gets a price of Rs 170-175 on BHEL. So I would suggest buy on dips may be around Rs 120-125 would be a good level to enter for a longer term horizon of 12-18 months and a price target of Rs 175," he added.