Shares of state-owned Bharat Heavy Electricals Ltd (BHEL) surged as much as 29% in intra-day trade on Friday, i.e. 18 October, after a media report said that the central government is likely to cut its stake in the company.
CNBC Awaaz reported that the government’s stake in BHEL may be pared in tranches to 26% from the current 63.17%. The government may also consider selling the company’s non-manufacturing units to private players, the report added.
At 1:27 pm, BHEL shares were trading at Rs 55, up 23.3%, after hitting an intra-day high of Rs 57.60. The stock today posted its biggest intra-day rally in a decade. Last time it had gained 29% in intra-day trade on 18 May 2009 on BSE.
The report said that an inter-ministerial group is expected to meet later in the day to discuss the stake sale. Meanwhile, the government is also reportedly looking to cut its stake in National Mineral Development Corporation (NMDC) in order to meet its divestment target of Rs 1.05 lakh crore for the current fiscal year.
Market analyst S.P. Tulsian seemed bullish on the BHEL stock. “Currently people are fed up with the quality of the Chinese turbine, boiler, and generator (TBG). BHEL equipments are expensive, but their running life is around 25 years, that of the Chinese equipments are 10 years. The huge demand for the TBG will keep coming in for the BHEL because people will need a replacement for Chinese equipment… Hence, I see huge upside potential in the company going forward,” said Tulsian.
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