BHEL - Making The Right Noises: ICICI Securities

ICICI Securities Report

Ridiculed. Opposed. Self-evident – the three stages of all incontrovertible ideas. We have arrived at the third stage of the idea that adding thermal capacity is receiving almost universal acceptance.

India needs additional thermal capacity – we were of the firm belief that India needed to increase additional supply to ensure a smooth energy transition while the street has been negative on coal capacity addition.

In a first, the government accepted the need to add incremental 50 giga watt of thermal capacity to ensure a reliable grid compared to the earlier held belief of mere 15-20 GW capacity addition.

As a result, we expect coal capacity bidding to continue over medium term.

Bharat Heavy Electrical Ltd. remains the key beneficiary of the increase in thermal capacity addition.

We increase our target price to Rs 150/share and maintain 'Buy' rating on the stock.

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