BHEL shares gain after bagging ₹5,400 crore order from JV with Coal India in Odisha

Shares of Bharat Heavy Electricals Ltd. (BHEL) gained on Friday, January 9, after the company won an order worth ₹5,400 crore in Odisha from its Joint Venture company with Coal India Ltd. This is described as a "related party transaction."

The order is for the coal gasification and raw syngas cleaning plant (LSTK 1 Package) of the JV Bharat Coal Gasification and Chemicals Ltd.'s (BCGCL) coal to 2,000 TPD ammonium nitrate project in Odisha.

The contract is for design, engineering, supply of equipment, civil works, setting up, commissioning and operations and maintenance (O&M) services for the LSTK 1 Package.

The preliminary acceptance — commissioning and performance guarantee test — is to be by 42 months. The O&M services are for 60 months from

the preliminary acceptance.

The order falls within related party transactions and is done at "arms length", the company said.

BHEL's shares fell over 10% on Thursday after a Reuters report stated that the Indian government is looking to lift restrictions on Chinese companies in bidding for government contracts. The report took not just BHEL, but shares of its other Capital Goods peers such as ABB India, Siemens India, L&T down between 4% to 6% as well.

Brokerage firm UBS though, maintained its "buy" rating on BHEL with a price target of ₹375, which implies a potential upside of 36% from current levels.

UBS wrote in its note that the transaction marks the first commercial use of BHEL's proprietary PFBG technology, and is moving from the R&D stage to the execution one. It said that this will be a positive read-through for the stock after the recent correction.

BHEL shares were trading 1.5% higher at ₹275.95 apiece just after market open on Friday. The stock has gained 27.5% in the past year.

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