BHEL: Execution to remain sluggish as power projects await clearances

Bharat Heavy Electricals Ltd (Bhel) shares have risen 14 per cent over the past month. Though the quarterly performance continues to show strain, most of the stock’s performance has to do with expectations of a turnaround in order flows. As is the case with many large-cap stocks, which have run up significantly on an expected revival in the economy, the Street’s view is turning cautious. The company’s earnings were expected to return to positive territory, after declining 35 per cent over three years. The formation of Telangana was said to be a turning point, as Bhel signed a memorandum of understanding (MoU) for 6 Gw with the state. The ride is not going to be as smooth as anticipated by the Street. For starters, earlier this month, the Tamil Nadu Electricity Board is said to have scrapped the tender for the Udangudi Power Project, where Bhel was the lowest bidder. The bids were invited in 2013 and opened last year. According to Barclays, a new tender is expected to be released but finalisation is now likely in FY16, given the typical timelines for tender to order conversion. The brokerage does not expect this to impact its FY15 order inflow estimates but the event reduces near-term visibility on an order in which Bhel was L1 (lowest bidder). more at: http://www.business-standard.com/article/companies/bhel-execution-to-remain-sluggish-as-power-projects-await-clearances-115032400623_1.html