Why Bharat Heavy Electricals Limited (NSE:BHEL) Could Be Worth Watching

Today we're going to take a look at the well-established Bharat Heavy Electricals Limited (NSE:BHEL). The company's stock received a lot of attention from a substantial price movement on the NSEI over the last few months, increasing to ₹333 at one point, and dropping to the lows of ₹247. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Bharat Heavy Electricals' current trading price of ₹264 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Bharat Heavy Electricals’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Bharat Heavy Electricals

What Is Bharat Heavy Electricals Worth?

The stock is currently trading at ₹264 on the share market, which means it is overvalued by 40% compared to our intrinsic value of ₹188.86. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Bharat Heavy Electricals’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Bharat Heavy Electricals generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Bharat Heavy Electricals' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? BHEL’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe BHEL should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on BHEL for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for BHEL, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Bharat Heavy Electricals, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.