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BHEL Creates New 52-Week High of ₹199.65: Soars 191% from 52-Week Low in Just 10+ Months

BHEL Creates New 52-Week High of ₹199.65: Soars 191% from 52-Week Low in Just 10+ Months
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Chart: BHEL 52 Week High & 52 Week Low as of 29 Dec 2023

candles 10
BHEL hit its 52 week low of ₹66.30 on 27 Feb 2023 and from there it move to ₹199.65 creating a brand-new 52 Week High on 29 Dec 2023, giving a whopping 191.25% return in just 10 months and 2 days.

If you had invested ₹10,000 at its 52-week low price, your investment would have grown to ₹29,125 by 29 Dec 2023. This represents a gain of ₹19,125 in just 10 months and 2 days. Given BHEL's strong recent performance, Lets find out what opportunities lies ahead for BHEL

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BHEL’s Record Surge to a New 52-Week High

The 52-week high of Bharat Heavy Electricals Limited can be a result of many factors. Its previous 52-week high, before correction, was made on 20 December 2023 at ₹ 190.45. It took 09 days to create a new 52-week high at ₹ 199.65 on 29 December 2023. In between, it made a low of ₹ 165.80 on 21 December 2023, implying a correction of over 12%. It may represent a change in the investors’ sentiment about the company due to improved financial condition or may represent overvaluation. Let’s go through the factors contributing to its all-time high.

Factors Contributing to a Stock’s 52-Week High

Positive Earnings Reports

  • In Q2 FY24, its revenue increased by a marginal rate of 2.43% quarter-on-quarter. It earned a revenue of ₹ 5125 crores.
  • Its gross profit increased by 101.36% year-on-year due to comparatively lower cost of goods to revenue generated. It made a gross profit of ₹ 73.86 crores.
  • Its non-operating income has reduced by 99.40% quarter-on-quarter. We may see a positive non-operating income in Q3 FY24.
  • The Indian government aims to generate 500 GW of power annually by 2030, keeping its carbon emissions to a minimum. It needs support from renewable energy sources, which has increased the demand for solar power plants. Indirectly, it increased the number of projects under companies like BHEL, which deal in EPC projects related to solar power plants.
  • Big projects that are supposed to run for many years before covering their initial investment emphasise quality and efficiency in engineering practice and manufacturing process. BHEL can take advantage of the reputation it has already gained by completing big projects to increase its portfolio further.
  • The Indian government’s national initiatives, such as “Atmanirbhar Bharat Abhiyan”, are in favour of supporting domestic production of various products that are being imported. BHEL can use various schemes run by the government to boost its presence in new categories.

Positive Analyst Ratings

According to Simply Wall Street, based on the discounted cash flow model, the fair value of BHEL shares is ₹ 49.75. However, its CMP is ₹ 192.6, which means the stock is 287.1% undervalued. It has a price-to-sales ratio of 2.8x, which is lower than the peer average of 9.3x, thus making it undervalued. Its earnings are expected to grow at 68.80% per year, which will be faster than the 16.4% per year growth of the Indian market.

Potential Scenarios Following a 52-Week High

(Based on the chart of 1-week timeframe)

Converting numbers and candles into information can provide us with the market’s stance on the stock, which may help us make correct investment decisions. Since the listing of Bharat Heavy Electrical Limited in January 2003, it has made many all-time highs up to November 2007. In the week starting from 20 November 2023, it started its bull rally with higher highs and higher lows every week, except in the week starting from 18 December 2023. We can expect the trends to continue, so the investors may enter the stock at the price of their liking but be ready to exit the stock if it doesn’t make a new high in any week.

BHEL Stock Analysis: Potential Supports and Targets

As BHEL today (Fri 29 Dec 2023) created a new 52 week high there are chances of it becoming volatile. At this time potential investors and investors should keep an eye for opportunities for entry or exit. Below you will find BHEL's metrics highlight, potential support and targets derived using Fibonacci Retracement and Extensions method, where Golden Ratio is assumed to be a good support (entry point) and Golden Extension to be good resistance (target point)

KEY PERFORMANCE METRICS

MetricsValueOccured On
Close Price₹193.10Fri, 29 Dec 2023
52 Week High₹199.65Fri, 29 Dec 2023
52 Week Low₹66.30Mon, 27 Feb 2023
All Time High₹390.66Wed 07 Nov 2007

The above table shows that the close price of BHEL on Fri, 29 Dec 2023 was ₹193.10. The next target for it could be the All-Time High of ₹390.66 which is ₹197.56 more than from its close price of ₹193.10.

It's possible that some investors might consider booking profits near the 199.65 mark, which could apply downward pressure on the stock price. But what does this newly created milestone signify for potential investors? Lets find out.

BHEL Fibonacci Retracement Or Support levels

For those considering an entry, the Golden Ratio (61.8%) retracement level of ₹117 offers a promising point, given the likelihood of a pullback from these levels as new investors might come in at these levels.

Retracement or Support LevelsValues
S123.6%₹168
S238.2%₹148
S350.0%₹132
S461.8% (Golden Ratio)₹117
S578.6%₹94
S652 Week Low₹66

Note: This table was last updated on Fri, 29 Dec 2023.

BHEL Fibonacci Extensions Or Target levels

For those considering an exit, the Golden Extension (161.8%) level of ₹282 offers a promising point, given the likelihood of a downward momentum from these levels as investors might start booking their profits at these levels.

Extensions or Target LevelsValues
T152 Week High₹199
T2138.2%₹250
T3161.8% (Golden Extension)₹282
T4200%₹333
T5261.8%₹415

Note: This table was last updated on Fri, 29 Dec 2023.

Making Informed Investment Decisions

For any stock, reaching an all-time high is a significant milestone. Still, conducting thorough research and considering various factors is essential before making investment decisions. To make informed choices that align with your investment goals and risk tolerance, one needs to analyse the company’s fundamentals, industry trends, management’s strategy, and overall market conditions.

Company’s Financial Health

  • In 2022, BHEL had a debt of ₹ 5454 crores with a negative free cash flow of ₹ 1008 crores and cash & equivalents of ₹ 1577 crores. It shows a massive difference between the debt and funds, which makes it essential for the company to increase the amount under free cash flow or cash & equivalents.
  • In the short term, it has a liability of ₹ 23351 crores covered by assets of ₹ 30082 crores. The assets of ₹ 29288 crores cover its long-term liabilities of ₹ 9170 crores. It may need to sell its assets to increase its free cash flow to a healthy level.

Industry Outlook

  • As the Indian economy grows, we can expect an increment in the number of projects under the EPC model for the industry, which will not be limited by the geographical boundary of the country. It paints an optimistic picture of the future of the industry.
  • As technology becomes more advanced, we see an increased activity towards training employees in the latest technology and its application in various scenarios. It will make the field more professional in terms of the prerequisite knowledge required to enter the business.

Market Sentiment

Bharat Heavy Electricals Limited’s (BHEL) share price, influenced by positive investor sentiment, surged to a new 52-week high of ₹ 199.65. The optimism surrounding the share is based on improved financials, favourable industry trends, positive analyst ratings, etc. Being one of the Maharatna companies of the Government of India, it is well positioned to gain from the infrastructure projects related to making India one of the developed countries. BHEL benefits from India’s focus on renewable energy and domestic production schemes. The market trend suggests a bullish outlook, but investors need to conduct detailed research, considering factors like company fundamentals, industry trends, and financial health, to make informed investment decisions.

Disclaimer: Information is provided ‘as is’ and solely for informational and educational purposes, not for trading purposes or advice. We highly recommend to do your own research before making any investment.

About The Author

Nippun

Hi, I’m Nippun, a tech enthusiast from Haryana, India. I have been coding since 2010 and using my coding skills in the share market since 2020. I have been coding scripts in Pinescript that work on Tradingview app/web. I love learning about new technology and applying it to solve real-world problems. Coding and share-market are my passions, and I enjoy finding and fixing bugs in code. I aim to share my skill set and experience that can positively impact society. Feel free to connect with me, and let’s learn from each other. My Twitter