BHEL Shares Surge 14% on ₹3,500-Crore Order from Adani Power for 1,600 MW Thermal Power Plant

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BHEL Shares Surge 14% on ₹3,500-Crore Order from Adani Power for 1,600 MW Thermal Power Plant

Team FS

06/Jun/2024

Key Points:

BHEL shares jump 14% following a ₹3,500-crore order from Adani Power for a 1,600 MW Thermal Power Plant.
The order includes the supply of critical equipment manufactured at BHEL’s Trichy and Haridwar plants.
BHEL stock has surged 63% in the last six months and 250% over the past year.

Bharat Heavy Electricals Ltd. (BHEL) experienced a significant surge in its share price on Thursday, June 6, with the stock hitting a 10% upper circuit in early trading. This remarkable performance follows the announcement that the company has secured a substantial order worth ₹3,500 crore from Adani Power. The order involves setting up a 1,600 MW Thermal Power Plant (TPP) in Raipur, Chhattisgarh, which has sparked increased investor confidence and enthusiasm in the market.

Market Reaction and Stock Performance

At around 10 am, BHEL's shares were trading 14% higher at ₹290.70 on the BSE. This spike is part of a broader upward trend for the Public Sector Undertaking (PSU) stock, which has surged 63% over the past six months and an impressive 250% over the last year. On the previous trading day, Wednesday, BHEL shares closed 3.70% higher at ₹255.25 despite a volatile session, underscoring the market's positive sentiment towards the company.

However, it's worth noting that the stock has slipped 21% from its all-time high of ₹322.35, a level it reached on May 21, 2024. Despite this slight pullback, the recent order from Adani Power has rejuvenated investor interest and optimism regarding BHEL's future prospects.

Details of the Adani Power Order

BHEL announced in an exchange filing that it received an order from Adani Power Ltd (APL) for the establishment of a 2x800 MW Thermal Power Plant (TPP) in Raipur. The order includes the supply of critical equipment such as Boilers, Turbines, Generators, and associated auxiliaries along with control and instrumentation systems. BHEL’s Trichy plant will manufacture the boilers, while the Haridwar plant will produce the turbine generators. The scope of the order also encompasses the supervision of erection and commissioning of the plant.

This significant order from Adani Power is a major milestone for BHEL, reinforcing its position as a key player in the power sector. The successful execution of this project will not only bolster BHEL’s revenue but also enhance its reputation and capabilities in handling large-scale power projects.

Technical Analysis and Market Indicators

From a technical perspective, BHEL’s stock is showing strong performance indicators. As of the latest data, the stock's day RSI (Relative Strength Index) stands at 39.4. The RSI is a momentum oscillator that measures the speed and change of price movements; an RSI below 30 is considered oversold, while an RSI above 70 is considered overbought. BHEL's current RSI suggests that the stock is neither overbought nor oversold, indicating a balanced market sentiment.

The stock also has a one-year beta of 1.1, indicating higher volatility compared to the broader market. Despite this volatility, BHEL’s stock is trading higher than its 50-day, 100-day, 150-day, and 200-day moving averages, suggesting a strong long-term uptrend. However, it is trading lower than its 5-day, 10-day, 20-day, and 30-day moving averages, which could indicate short-term fluctuations.

Future Outlook and Investor Sentiment

The recent order from Adani Power and the subsequent stock surge highlight the positive market sentiment towards BHEL. Analysts and investors will be closely watching the company’s progress in executing the Raipur TPP project. Successful delivery on this order could pave the way for more substantial contracts in the future, further strengthening BHEL’s market position.

Moreover, the broader economic and policy environment will also play a crucial role in shaping BHEL’s future performance. Government initiatives aimed at boosting infrastructure development and energy production are likely to benefit companies like BHEL, which are integral to these sectors.

Conclusion

BHEL's recent ₹3,500-crore order from Adani Power for setting up a 1,600 MW Thermal Power Plant has significantly boosted its stock performance, with shares surging 14% in early trade. This order not only marks a major achievement for BHEL but also underscores its capability and expertise in handling large-scale power projects. With strong market performance and positive investor sentiment, BHEL is well-positioned for continued growth and success in the power sector.

As BHEL moves forward with the execution of this significant project, investors will be keenly observing the company’s progress and its ability to capitalize on emerging opportunities in the market. The evolving landscape of the energy sector, combined with strategic orders like the one from Adani Power, sets a promising stage for BHEL’s future growth and value creation.

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BHEL Shares Surge 14% on ₹3,500-Crore Order from Adani Power for 1,600 MW Thermal Power Plant

Key Points:

Market Reaction and Stock Performance

Details of the Adani Power Order

Technical Analysis and Market Indicators

Future Outlook and Investor Sentiment

Conclusion

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