BHEL Share OFS Opens: OFS opens for retail investors, discount reduced due to fall of shares, know whether money should be invested or not…

BHEL Share OFS Opens: The ‘Offer for Sale’ of Central Government Maharatna company BHEL opened for retail investors today, 12th February. The government is selling its 3% stake in the company through this offer. This also includes the option to sell 2% more stake through greenshoe option.

The floor price of ₹ 254 per share has been fixed. When the government announced this OFS, the floor price (₹254) was 8% less than the market price (approximately ₹276). However, after the announcement BHEL shares fell sharply to around ₹260. Due to this decline, the discount available to investors has now reduced to 2-3%. Experts believe that due to the low discount, this deal is no longer as attractive to investors as it used to be. However, it is still an investment option.

Brokerage firm JM Financial has set a medium-term target of ₹355. It says that India’s target is to increase its thermal capacity to 340 GW by 2047. BHEL currently has orders worth ₹2.23 lakh crore, which indicates good earnings in future. Apart from thermal power, BHEL is also working in the fields of nuclear energy and coal gasification. India has set a target of increasing nuclear capacity from 8.8 GW to 100 GW by 2047, in which BHEL will be the only domestic turbine manufacturer.

Bonanza’s research analyst Abhinav Tiwari says that investors should be cautious. He said that although the company’s order book is more than ₹2 lakh crore, its profitability ratios (ROIC and ROCE) are still low. According to him, the market has already taken into account the future recovery. Given the project completion risks and pressure on PSU stocks, new investments may be a bit risky.

Profit increased by more than 200% in the third quarter

BHEL’s net profit increased 206% year-on-year to ₹382 crore in the December quarter, compared to ₹125 crore in the same quarter last year. The company’s revenue also increased by 16% to ₹8,473 crore. The company’s profit increased due to better performance and better control over operations.

Keep these 3 things in mind before investing

• Lure of cheapness: The difference between floor price and market price is very less now, so do not apply just for the discount.
• Long-term: Thermal capex cycle can be beneficial only if you are investing for 2-3 years.
• Risk Factor: The increasing inclination towards renewable energy (solar and wind power) may impact coal-based projects in the long run.

All earnings will go to the government

This is an ‘Offer for Sale’ in which the promoter, Government of India, is selling its stake. This means that the entire income from the sale of shares will go to the government. This will not have any direct impact on the company’s debt or balance sheet.