Oswal downgrades BHEL to 'neutral'
Broking house Motilal Oswal has downgraded BHEL to ‘neutral’ due to little upside to the stock from current levels.
By ET Bureau |
BHEL
cmp: Rs 1,365
target price: RS 1,385
Broking house Motilal Oswal has downgraded BHEL to ���neutral��� due to little upside to the stock from current levels. ���BHEL is driven by superior earnings visibility (32% Compounded Annual Growth Rate, or CAGR) over financial year 2008-10) and improved business environment such as diminishing threat of Chinese competition, improved positioning in super critical projects and continued robust cash flows of utilities,��� says the report.
However, it adds that while premium valuations factor in superior earnings growth, BHEL may continue to outperform peers, given the improved business environment and resilient earnings growth. It says due to little upside from the current level, the stock has been downgraded to neutral. BHEL has outperformed the BSE-Sensex by 6% and L&T by 17% since the beginning of the year.
The report furthers states that it expects stagnation in order intake and increase in working capital. ���The key issue going forward, will be the stagnant trend in order intake during FY08-FY10, impacting revenue and earnings growth beyond FY11. We arrive at a price target of Rs 1,385 (16 times FY10 (Expected earnings),��� it said.
cmp: Rs 1,365
target price: RS 1,385
Broking house Motilal Oswal has downgraded BHEL to ���neutral��� due to little upside to the stock from current levels. ���BHEL is driven by superior earnings visibility (32% Compounded Annual Growth Rate, or CAGR) over financial year 2008-10) and improved business environment such as diminishing threat of Chinese competition, improved positioning in super critical projects and continued robust cash flows of utilities,��� says the report.
However, it adds that while premium valuations factor in superior earnings growth, BHEL may continue to outperform peers, given the improved business environment and resilient earnings growth. It says due to little upside from the current level, the stock has been downgraded to neutral. BHEL has outperformed the BSE-Sensex by 6% and L&T by 17% since the beginning of the year.
The report furthers states that it expects stagnation in order intake and increase in working capital. ���The key issue going forward, will be the stagnant trend in order intake during FY08-FY10, impacting revenue and earnings growth beyond FY11. We arrive at a price target of Rs 1,385 (16 times FY10 (Expected earnings),��� it said.
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