BHEL - A Call For More Than Rs 1 Trillion Thermal Tenders; Sets Up Nicely For FY25E: ICICI Securities

ICICI Securities Report

The new fiscal (FY25) has started with an urgency to begin the awarding of new thermal power plants. While National Thermal Power Corporation has called for new tenders for 10GW of thermal power plants, private sector had already chipped in.

All tenders are for one package - EPC for the entire power plant. BHEL is likely to be a major beneficiary. Adani Power has awarded two power plants of 3.2GW worth Rs 70 billion to the company.

We estimate Bharat Heavy Electricals Ltd. to win tenders worth > Rs 800 billion due to lack of competition in new thermal power plants. We estimate the orderbook at Rs 1.9 trillion at the end of FY25E. As a result, we expect execution and margins to improve FY26 onwards.

We reiterate 'Buy' on Bharat Heavy Electricals with target price at Rs 370/share, valuing the stock at 40 times FY26E earning per share of Rs 9.2/share.

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