BHEL: Following the company’s announcement on March 21 that it had secured a letter of intent (LoI) for a project worth Rs. 7,500 crores from the GSECL (Gujarat State Electricity Corporation), Bharat Heavy Electricals’ stock surged more than 3%. BHEL’s stock was trading at about Rs. 211 per share in the morning. Let’s look at the possible reasons that might result in a jump in Bharat Heavy Electricals Limited shares.
About the Company
The biggest engineering and manufacturing company in India’s energy and infrastructure industry, Bharat Heavy Electricals Limited, was founded in 1964 and is capable of producing the whole spectrum of power plant equipment. The company has references in 83 countries worldwide and serves key industries, including power generation, transmission, industrial, transportation, renewable energy, oil and gas, water, defense and aerospace, e-mobility, and energy storage solutions.
The vast network of 16 manufacturing facilities, 2 repair facilities, 4 regional offices, 8 service centers, 1 subsidiary, 5 joint ventures, 3 overseas offices, 15 regional marketing centers, and more than 150 project sites in India and overseas demonstrates BHEL’s enormous scale of operations.
Jump in the Shares
Bharat Heavy Electronicals Limited shares have now increased in value for five straight sessions. The stock fell to Rs. 176 a share on March 3, a 52-week low, but it has since recovered well. The 52-week high of Rs. 335 per share, which it reached in July of last year, is more than 36% more than this. The last 6 months have seen a decline of more than 22% in BHEL shares, but now the shares expect a further jump due to the recent order the company has received.
As part of the EPC project for an 800-megawatt expansion unit in Gujarat’s Tapi district, BHEL stated in an exchange document publicly available on March 21 that it will provide boiler, turbine, generator, and associated goods. Erections, commissioning, and other civil works would also be included under the contract. The LoI was received on March 20th, according to BHEL.
Financials of the Company
The net profit of BHEL increased by 170% year over year to Rs. 124 crore for the quarter that concluded in December. At Rs. 7,277 crore, its income increased by 32% in the meantime. In Q3 FY25, BHEL’s order book jumped 47 percent year over year to reach Rs. 1.6 lakh crore, while the company’s order inflow increased by an astounding 167 percent.
Conclusion
The recent purchase of a Rs. 7,500 crore contract from GSECL by BHEL clearly caused a favorable market response, which raised the company’s stock price noticeably. This demonstrates how sensitive stock markets are to big contract wins, especially for businesses in capital-intensive industries like BHEL. Even though this sudden spike shows investor optimism, it’s important to recognize that a variety of factors other than single order announcements affect stock performance.
For more information, go to the Angelone app, which allows you to start investing right away and set up your Demat account with only one swipe.
Disclaimer: Demat Dive is not giving any buying advice on any stock. Consult a SEBI-registered advisor before investing anywhere.