BHEL Shares Fall 10% — Here's Why Investors Are Selling The PSU Stock
The sharp plunge in the BHEL stock comes in the wake of a Reuters report that suggests the Indian government is considering scrapping curbs that restrict Chinese firms from bidding for govt contracts.
Shares of Bharat Heavy Electricals Ltd. (BHEL) have nosedived late in Thursday's trade, despite having confirmed entry into the semi-high-speed rail market earlier in the day.
The stock is currently trading at Rs 270, accounting for a fall of 11% compared to Wednesday's closing price of Rs 303.55. This is the lowest point for the stock in over two months.
BHEL shares have fallen after a block deal, which saw 2.4 million shares change hands. It also comes in the wake of a Reuters report that suggests the Indian government is considering scrapping curbs that restrict Chinese firms from bidding for government contracts.
India is planning to curb the five-year-old restriction in an attempt to normalise commercial ties with Chinese, especially against the backdrop of an easing of diplomatic and border tensions.
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The move could potentially impact BHEL and other public sector undertakings whose topline and orderbook mainly consist of government order, as it would mean they will have to directly compete with Chinese firms.
The restrictions, which were put in place in 2020 after deadly border clashes between the troops, had effectively given Indian firms the luxury to compete for government contracts without having to worry about competition from Chinese firms.
Reuters now reports the Indian government is planning to scrap the move, though the final decision will have to come from Prime Minister Narendra Modi's office.
Earlier in the day, BHEL confirmed it has entered the semi-high-speed rail market by beginning the supply of traction converters for the Vande Bharat sleeper train project.
The company, in consortium with Titagarh Rail Systems Ltd. is currently executing the prestigious order for manufacturing and supply of 80 Vande Bharat trains, along with 35 years of maintenance, according to an annual report.
Besides rail, BHEL is also a player in the nuclear energy sector, which was recently liberalised to allow larger private and foreign investment. "In nuclear energy, BHEL is positioned to contribute meaningfully to India's long-term goals, with the national target of 100 GW by 2047 and the development of Small Modular Reactors by 2033. The Company’s track record in nuclear steam generators and turbine systems supports this strategic direction." the report said.
