BHEL Share Price Target 2024: Know Why Stock Has Been Downgraded To 'Sell'

bhel share price target 2024: know why stock has been downgraded to

BHEL share price target: Bharat Heavy Electricals Limited (BHEL), India’s state-owned engineering and manufacturing enterprise, has been a beacon of positive performance in several sectors. Notably, the company has demonstrated a remarkable 137 per cent year-on-year growth in order inflows during the third quarter of the fiscal year 2024, underpinning its robust business model and operational efficiency. This growth was significantly bolstered by the industry segment, which alone saw a 28 per cent increase in revenue, showcasing BHEL’s strong market presence and ability to leverage opportunities in diverse sectors.

BHEL Share Price Target

Despite these achievements, Geojit Financial Services has recently downgraded BHEL’s stock to a ‘Sell’ rating, assigning a target price of Rs. 203. This decision was influenced by a comprehensive analysis of BHEL’s financial health and market position, which, despite the company’s operational successes, raised concerns regarding its valuation and future profitability. The downgrade reflects a cautious stance towards BHEL’s stock, prompted by the challenges it faces amidst a competitive and rapidly evolving market landscape.

Why Has The Stock Been Downgraded?

The rationale behind Geojit’s downgrade is multifaceted. While BHEL’s order backlog presents a potential for future revenue growth, the firm has identified significant cost pressures that could undermine profitability. These include a negative Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) of Rs 63 crore in the third quarter, a stark contrast to the Rs 144 crore recorded in the corresponding quarter of the previous year, and an after-tax loss of Rs 149 crore. These financial indicators suggest underlying operational challenges that BHEL must address to enhance its market valuation and attract investor confidence.

In essence, while BHEL has shown commendable performance in securing new orders and expanding its market reach, the downgrade by Geojit Financial Services serves as a reminder of the intricate balance between operational success and financial sustainability.

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