Barclays Underweight on BHEL; target price set at Rs 225

Barclays has maintained ‘underweight’ rating on BHEL, with a target price of Rs 225. It will be difficult for the company to make profits with the price it has quoted for NTPC’s boiler orders, the brokerage said.

Low margin orders will impact margins and return ratios from FY14. With BHEL also likely to invest excess cash in over 5-7 GW of state JVs, RoE is set to deteriorate.