Stocks to Watch: Adani Energy, BHEL in Focus After Key Order Update
Introduction
Adani Energy: Investors keen on power sector stocks should keep an eye on Adani Energy Solutions Ltd and Bharat Heavy Electricals Ltd (BHEL) as they have secured a major project linked to India’s renewable energy push. Rajasthan Part I Power Transmission Limited, an SPV under Adani Energy Solutions, has issued a Letter of Intent (LoI) to a consortium of BHEL and Hitachi Energy India Limited (HEIL) for establishing power terminal stations in Rajasthan and Uttar Pradesh.
This development, disclosed in a BSE filing, is expected to significantly impact the stock prices of Adani Energy and BHEL in the coming sessions.
Key Highlights of the Order
- The LoI is for designing and executing a High Voltage Direct Current (HVDC) link with associated AC substations to transmit renewable energy from Bhadla III (Rajasthan) and Fatehpur (Uttar Pradesh).
- The contract is yet to be officially executed but is expected to be completed by 2030.
- This project is a crucial step towards strengthening India’s renewable energy infrastructure.
Market Reaction & Stock Performance
Adani Energy Share Price Analysis
- Latest Close: ₹773.95 (+0.21%)
- 52-Week High: ₹1,347.90 (August 1, 2024)
- 52-Week Low: ₹588.25 (November 27, 2024)
- Market Capitalization: ₹92,973.27 crore
- 5-Year Return: +135%
- 1-Year Return: -26.58%
- YTD Performance: -3.89%
Despite strong long-term returns, Adani Energy’s stock has been under pressure in the last one year, declining over 26%. The latest project win could act as a catalyst for the stock’s recovery in the coming months.
BHEL Share Price Analysis
- Latest Close: ₹202.85 (-0.95%)
- 52-Week High: ₹335.40 (July 9, 2024)
- 52-Week Low: ₹185.20 (January 29, 2025)
- Market Capitalization: ₹70,633.66 crore
- 5-Year Return: +400%
- 1-Year Return: -10.85%
- YTD Performance: -13%
BHEL has been a strong performer over the last five years but has faced a correction in the last year. The latest power infrastructure contract could provide fresh momentum to the stock.
Financial Ratios
Here’s a look at the key financial ratios of Adani Energy Solutions Ltd and BHEL:
| Financial Ratio | Adani Energy Solutions | BHEL |
|---|---|---|
| P/E Ratio | 62.8 | 21.5 |
| P/B Ratio | 7.1 | 1.8 |
| Debt-to-Equity | 2.3 | 0.5 |
| Return on Equity (ROE) | 12.5% | 9.8% |
| Dividend Yield | 0.23% | 1.2% |
| EPS (TTM) | ₹12.31 | ₹9.45 |
What This Means for Investors
Adani Energy Solutions Ltd:
- The order book expansion supports long-term growth prospects.
- High valuations and recent stock correction may indicate near-term volatility.
- The company’s presence in India’s renewable energy infrastructure makes it a long-term growth stock.
BHEL:
- This contract reinforces BHEL’s role in India’s power infrastructure development.
- Lower debt-to-equity ratio makes BHEL a relatively safer bet for conservative investors.
- The stock’s recent dip could offer buying opportunities for long-term investors.
Conclusion
The latest power infrastructure project awarded to Adani Energy and BHEL signals strong growth potential for both companies. Investors should monitor these stocks closely, as the execution of this project will likely influence their future earnings and stock performance.
For traders, any short-term dips in these stocks could be buying opportunities, while long-term investors may consider gradual accumulation for sustained portfolio growth.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.