BHEL - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

📊 Investment Rating: 2.9

⚙️ Long-Term Investment Outlook

Bharat Heavy Electricals Ltd (BHEL) is a strategic PSU with national importance, but its financial metrics and valuation raise red flags for long-term investors seeking consistent compounding.

🔍 Valuation & Growth Metrics

P/E of 161 vs Industry PE of 57.2 → extremely overvalued.

PEG Ratio of 27.9 → unsustainable valuation relative to growth.

Price-to-Book ~3.4x → not excessive, but high for a low-ROE business.

💰 Profitability & Financial Strength

ROCE (4.87%) and ROE (2.12%) → very weak capital efficiency.

EPS of ₹1.53 → low earnings base for a large-cap.

Debt-to-Equity of 0.36 → manageable leverage.

Dividend Yield of 0.21% → minimal income generation.

📉 Technical Indicators

RSI at 35.9 → approaching oversold zone.

MACD negative → bearish momentum.

Trading near 200-DMA (₹239) → potential support zone.

📈 Institutional Sentiment

FII holding down (-0.83%), DII holding up (+2.11%) → domestic optimism, foreign caution.

🎯 Ideal Entry Price Zone

Entry Zone Rationale

₹215–₹230 Near technical support and RSI oversold zone

< ₹210 Strong buy only if ROE/ROCE improve

Avoid entering near ₹240 unless profitability metrics show sustained improvement.

🧭 Exit Strategy / Holding Period

If you already hold BHEL

Holding Period: Only consider 3–5 years if strategic tailwinds (e.g., defense, renewables) materialize.

Exit Strategy

Partial exit if price rebounds to ₹270–₹300 without ROE/ROCE improvement.

Full exit if ROE stays below 5% or PEG remains above 10.

Hold if ROE improves to >10% and PEG drops below 2.

Would you like a comparison with NTPC or L&T to see how BHEL stacks up among capital goods and power PSUs? 🔌

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