BHEL Stock on the Rise? Choice Broking Sees 14% Gain Backed by Strong Charts

Shares of Bharat Heavy Electricals Ltd (BHEL) have been gaining attention from brokerage firms, with both technical and fundamental analysts maintaining a positive outlook on the stock. According to market experts, the technical indicators for BHEL are showing signs of strength, suggesting that the stock could rise by approximately 14% over the next month.

On Tuesday, BHEL shares witnessed notable activity, climbing nearly 5% during the session. The stock touched an intraday high of Rs 204.50 before settling at Rs 203.90 by the close of trading. This recent upward movement reflects renewed investor interest in the stock, contributing to a total market capitalization just below the Rs 71,000 crore mark.

Despite this positive momentum, BHEL shares remain significantly off their peak levels. The stock is currently down about 40% from its 52-week high of Rs 335.40, which it had reached in July 2024. This gap indicates that while the stock has shown signs of recovery, it still has considerable ground to cover to regain its previous highs.

Market analysts have pointed out that the current strength in BHEL’s technical charts is supported by improving market sentiment and potentially favorable business fundamentals. The combination of technical and fundamental strength is seen as a key driver behind the stock’s recent performance and the expectation of further gains in the short term.

While the broader market environment and sector-specific trends will likely influence BHEL’s future performance, the positive signals from both technical and fundamental perspectives have positioned the stock as one to watch in the coming weeks.

Choice Broking has expressed a positive outlook on the shares of Bharat Heavy Electricals Ltd (BHEL), suggesting that the stock could see a rally of approximately 14% over the next month, driven by encouraging technical signals. The brokerage firm highlighted that key technical parameters are aligning in favor of a potential upward move, reinforcing the stock’s bullish momentum.

One of the key indicators supporting this view is the Relative Strength Index (RSI) on the daily chart, which currently stands at 54.8. The RSI has rebounded from the oversold zone, which is often interpreted as a sign that selling pressure has eased and that the stock may be primed for a reversal. The recovery in the RSI strengthens the case for a potential upward trend in the near term.

Additionally, BHEL is trading above its 20-day Exponential Moving Average (EMA), which is considered a positive signal of short-term strength. The stock is also approaching the 100-day EMA, and a sustained move above this level would further solidify the bullish outlook. The proximity to this key technical threshold suggests that the stock could gain additional momentum if it manages to break through and hold above this resistance level.

A significant technical formation adding to the bullish case is the appearance of an inverted head and shoulders pattern on the daily chart. This pattern, which has formed at the bottom of the stock’s recent downtrend, is typically seen as a strong reversal signal. An inverted head and shoulders pattern reflects a shift in market sentiment from bearish to bullish and is often accompanied by increased trading volumes, which further confirms the strength of the breakout.

Choice Broking noted that the stock is currently on the verge of a breakout from this pattern, supported by notable trading volumes. The combination of a recovering RSI, positive EMA positioning, and a bullish reversal pattern suggests that BHEL could be entering a period of sustained upward momentum if these technical signals continue to hold.

The overall technical setup points to improving strength in BHEL’s price action, with both momentum and trend indicators signaling the potential for a significant upward move in the near term.

Choice Broking has highlighted a promising technical setup for Bharat Heavy Electricals Ltd (BHEL), suggesting that the stock could see significant upward movement if it manages to sustain key price levels. According to the brokerage, BHEL’s ability to close above Rs 202.5 could act as a strong trigger for further gains in the short term. A successful breakout above this level is expected to create positive momentum, potentially driving the stock toward a target of Rs 229.7.

On the downside, Rs 198 has been identified as an immediate support level. If the stock experiences any pullback toward this level, it may attract renewed buying interest, reinforcing its position as a potential accumulation zone. To manage downside risk, Choice Broking pointed to Rs 188 as a key level for setting a stop-loss, indicating that a breach below this level could weaken the technical outlook.

Beyond the technical indicators, BHEL’s recent financial performance has also contributed to improving market sentiment around the stock. The company reported a 170% year-on-year (YoY) increase in its net profit, which surged to Rs 124 crore in the December 2024 quarter. This substantial growth reflects improved operational efficiency and increased business activity.

Revenue for the quarter also showed strong momentum, rising by 32% YoY to Rs 7,277 crore. This growth indicates that BHEL has been able to secure more business and execute projects effectively despite broader market challenges.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) grew by 40% YoY to Rs 304 crore during the quarter, underscoring improvements in the company’s core profitability. Moreover, the EBITDA margin expanded by 30 basis points to 4.2%, reflecting better cost management and enhanced operational efficiency.

The combination of robust technical indicators and strong financial performance suggests that BHEL is positioned well in the current market environment. The company’s ability to sustain these gains and capitalize on positive market momentum will depend on how it navigates near-term price levels and market conditions.

Phillip Capital has set a target price of Rs 270 for BHEL, reflecting confidence in the company’s ability to capitalize on the favorable market conditions and deliver consistent growth in the coming quarters.

Other major brokerage firms have also weighed in with their outlook on BHEL, offering a range of target prices based on their assessment of the company’s fundamentals and market position. Antique Stock Broking has maintained a positive stance on BHEL, setting a higher target price of Rs 300, indicating that the firm expects significant upside potential based on the company’s improving financial and operational performance.

Morgan Stanley remains optimistic about BHEL’s prospects as well, maintaining an ‘overweight’ rating on the stock. The global investment firm has set a notably higher target price of Rs 352, which reflects strong confidence in BHEL’s ability to deliver growth and sustain its market position.

Prabhudas Lilladher has adopted a more moderate stance, assigning an ‘accumulate’ rating on BHEL with a target price of Rs 226. This suggests that while the firm sees potential for steady gains, it is more cautious about the pace and scale of future growth compared to other brokerages.

On the other hand, Kotak Institutional Equities has taken a more conservative view, assigning a ‘sell’ rating on the stock. Kotak has set a significantly lower target price of Rs 115, indicating that the firm holds reservations about BHEL’s ability to maintain its current momentum or meet market expectations in the near term.

The divergence in target prices and recommendations among brokerage firms reflects differing views on BHEL’s growth trajectory, market conditions, and sector performance. While some firms are highly optimistic about the company’s future, others remain cautious, highlighting the complexities and uncertainties surrounding the capital goods sector and BHEL’s ability to sustain growth in a competitive environment.