BHEL zooms 14% on reports CLSA upgrades to 'Buy' from 'Sell'

State-owned Bharat Heavy Electricals Ltd (BHEL) zoomed 14 per cent to Rs 61.30 apiece on the BSE on Wednesday after global brokerage firm CLSA upgraded the stock to 'Buy' from 'Sell' owing to the benefits that the company could reap due to government's stake sale.

According to reports, the brokerage sees "limited risk" in the stock and believes the "company has a lot to gain from a strategic partner". If the divestiture fails, there could be risks to market price, it said. While the brokerage believes the "strategic sale could unclock value" for the company, it has cut its FY20 EPS estimates on the back of weak H1FY20. The firm has set a target price of Rs 67, up from a previous target of Rs 54.

At 9:39 am, the stock was trading 10.23 per cent higher at Rs 59.25, as against an unchanged benchmark S&P BSE Sensex index. A total of 3.04 crore shares changed hands on the NSE and BSE till the time of writing of this report.

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Earlier this month, reports suggested that Centre could reduce its stake in the heavy equipment manufacturer to 26 per cent from 63.17 per cent as part of its strategic divestment. The same day, the stock surged 27 per cent in the intra-day trade registering its biggest-ever intra-day rally in a decade.

BHEL is one of India’s largest engineering and manufacturing enterprises in the energy and infrastructure sectors and a leading power equipment manufacturer globally. BHEL serves the core sectors of the economy and provides a comprehensive portfolio of products, systems and services to customers in power, transmission, transportation, renewables, water, defence & aerospace, oil & gas, and industry.

Thus far in the calendar year 2019, BHEL has underperformed the market by falling 26 per cent, as compared to an over 10 per cent gain in the S&P BSE Sensex. However, in the last fortnight, BHEL has zoomed 46 per cent as compared to a 4 per cent rise in the S&P BSE Sensex.