Chinese competition a big worry for BHEL

Unlike most peers, Bharat Heavy Electricals (BHEL) has been a laggard on the bourses in the past four months. While its financial performance has remained stellar, what concerns analysts is the growing competition from Chinese companies.

BHEL's stock has fallen by 4% in the past four months, as against the 6% gains of the BSE Capital Goods. Due to the fall in valuations, the public sector company now trades at a discount to its peers.

Recently, BHEL had lost a few bulk orders to Chinese and private Indian competitors. China-based Dongfang Electric, for instance, bagged Abhijeet Group's 11,300-crore order for 600 MW supercritical coal burning units. In another instance, Reliance Power placed orders worth around 37,700 crore with Shanghai Electric for coal-fired power generators.

The order loss, however, would not impact BHEL's near-term growth, since it had orders worth 154,000 crore till September-end - its biggest order book ever and nearly four times its revenues for the trailing 12 months. But increasing competition from Chinese vendors raises concerns about BHEL's long-term growth prospects.

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http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/chinese-competition-a-big-worry-for-bhel/articleshow/7213480.cms