The EPS growth is only about 20%, from 49.3 to 57.5. Their order inflow was 35,000 cr. and is now at 50,000 cr. The book must be quite a bit more, around 60,000 cr. The current price of Rs. 1800 gives them a P/E of 30.
I don’t think it’s worth a buy. Why? My original assessment had some valid and invalid assumptions:
The overall target of Rs. 2900 in 2012 (5800 divided by 2 for bonus) probably still stands at an averaged growth of 20% a year on EPS. That gives you a Rs. 1,100 return on a 1,800 investment, which is about 60% return in four years, or about 12.5% annualised. At that rate I would not rate it high enough to be a stock pick – in fact I have my doubts about whether it would outperform the Nifty from here. (Nifty’s P/E is 20 today)
Not much to report, but interesting to see where I was right and wrong. I got into this stock at 2300 (1150 post bonus) and exited at 1650 or so, a 44% profit in four months. BHEL went phenomenally up since then and reached nearly 2800 – I missed all of that ride – and then fell back to today’s 1800 levels. It was not a momentum pick for me when I saw it, it was based on fundamentals, so I don’t particularly mind missing the upside (in fact my momentum portfolio gave me a similar upside return). I don’t like to show off – it’s not my style – but it’s heartening to know that some convictions were on the dot. Where I was wrong was in not recognising the force of the (temporary) momentum on power stocks – but who’s to predict that?