Technical Analysis of Indian Equities by Nooresh

BHEL — Available at 5-7 year support zones.




BHEL – The stock is available at 5-7 year support zones.


Either the situation is as bad as 2008 for the sector or we should turnaround from current levels.

Can keep a closing stoploss of 200.

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{ 6 comments… add one }
  • Ashutosh May 11, 2012, 16:07

    BHEL is one of the few stocks that has not been able to sustain its price post the liquidity driven rally, and is close to its December lows of 222.
    Let my enumerate few problems with the sector as well as with BHEL.
    1. BHEL has faced the sharpest drop in its orderbook in FY 12. The company had guided an expansion of about 10% in the order intake, however Its orderbook contracted about 66% from FY11. A significant chunk of orders were wiped out of its books due to cancellations, as the power sector faced problems with project executions and high fuel costs.
    2. The market share of BHEL has dropped from about 70% in FY 12 to about 40-45% in FY12.
    3. The sector faces a significant amount of overcapacity with BHEL being the leader of the pack. The power ministry also has revised its power capacity expansion downwards, which is worrying for BHEL.

    Valuation: The stock is trading about 9.8 times FY 13 earnings which seems very cheap for a Bluechip like BHEL, however we can only expect an improvement in earnings if we witness a growth in its orderbook which looks unlikely atleast in H1 FY13. The likelihood of a further downside remains limited. The stock is an avoid for a short term investor as the problems will take time to resolve but if one has a view of over an year,one can look to buy the stock as most of its issues are already priced in the stock.

    • Nooresh May 13, 2012, 19:33

      Hi deadman,

      But the only time to get into a blue chip is when all the chips are down for the business. If its a great company then it has to find its way out.
      The stock is available at 2008 levels.

      So if one believes in the long term fundamentals of the company BUY. As a technical play keep a stop below 200. Very high risk-reward

  • Ashutosh May 11, 2012, 16:14

    The market share of BHEL has dropped from about 70% in FY 07 to about 40-45% in FY12

  • G May 12, 2012, 12:13

    Sir neither am i a trader nor an excellent technical analyst just an amateur learning Technicals…so i wanted to ask sir if u think there is upside momentum could u explain the rationale behind it…Thanks

    • Nooresh May 13, 2012, 19:30

      BHEL its a more medium to long term bet and deep stoploss

  • ASHUTOSH May 13, 2012, 20:24

    Totally agree with u sir, since its a government company, it will not have problems with order flow.. However the structural problems with the power sector will take time to resolve.. The stock is a good bet for a medium to long term


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