BHEL may stay under pressure on weak fundamentals, looming disinvestment: Anand Tandon

In a chat with ET Now, Anand Tandon, an independent analyst, shares his view on what impact the disinvestment rumours may have on PSU stocks.

ET Now: The market does not seem to be optimistic over divestment candidates. NTPC and BHEL were down up to 3 per cent on Wednesday as the government is looking to offload stakes in these name. How would you view the situation?

Anand Tandon: If the disinvesting stocks are from the F&O space, then the usual arbitrage comes into the equation. It is because you can actually sell now and buy later. These stocks can later be bought at discounts. Besides, both NTPC and BHEL do not look exciting at this stage.

Among the two, NTPC is in a little better position, I must say. This is because the NTPC business is set to grow,. Having said that, valuations are again more or less fully pricing in whatever one can get out of NTPC.

It is a utility firm after all. BHEL in my view will continue to be under pressure because its core business, which is of supplying power stations, is not something that I see as a growth sector for the next several years.

At the end of the day, there is almost 30 gigawatts of capacity which has to come on stream. Once this coal auction is out of the way, you have to get that capacity utilised. New fresh orders are likely to be less than what we used to have. So unless, BHEL is able to rapidly scale up some of the business, which will be a challenge by itself, it is not likely to be a favourite pick.