Poor order-book inflow, compounded by weak company performance, saw Bharat Heavy Electricals Ltd stock hitting a 5-year low of Rs 196 on the NSE on Tuesday. However, it ended the day up 1.4 per cent, to close at Rs 200.90 per share.
Over the last year, the stock has declined about 41.3 per cent. Analysts say the company’s troubles are due to the subdued order book inflow. “The order book inflow of the company stands at 66 per cent of what it was last year. There is no positive development that can lend support to the stock. The valuations are good, but the business environment for the company needs to improve,” said Shailesh Kanani, Equity Research Analyst, Violet Arch Securities.
“BHEL continues to see bad news, the latest being the involvement of some of its private sector customers in the alleged coal allocation scam. In our worst-scenario analysis, BHEL’s earnings can decline by 65 per cent in FY15 from FY12 levels and the stock could move closer to Rs100/share. Stay clear of the stock,” cautioned Macquarie Equities Research.
Institutional interest also declined since September 2011. As of September 2011, 220 mutual fund schemes had invested in the BHEL stock. That number had fallen to 173 schemes at June-end.
The number of foreign institutional investors too declined from 496 to 441. FIIs and domestic funds currently hold 12.93 per cent and 13.11 per cent respectively.