The PSU has reported a 52 per cent rise in net profit to Rs 704.20 crore on a turnover of Rs 6466.43 crore for the year ended March 31, 1998. However, the scrip was hammered down after the United States imposed sanctions on India. The company may face difficulty as many of its projects are funded through multilateral funding agencies and the scrip has fallen from Rs 394 to the current level of Rs 376 after the sanctions. Nevertheless, with more than Rs 10,000 crore worth orders under its belt, the company's performance is unlikely to deteriorate in the fiscal 1998-99.

BHEL is at a dis-advantage vis-a-vis its competitors especially Siemens and GEC which are supported by cash rich and technologicallyadvanced foreign promoter companies. However, still it has managed to record an order inflow of Rs 5,853 crore during 1997-98. This was despite the sluggish market conditions, fiscal disadvantages and demand contraction. The company's almost monopoly position, Navratna status, its cater to power sector (power being one of the thrust areas) and many projects coming up in the next few years make the scrip a good pick.

BHEL intends to invest about Rs 1,000 crore during the Ninth Plan period, half of which would be for renovation of old plants. BHEL had set up two joint venture companies in the last fiscal with Siemens AG for carrying out renovation and modernisation of ageing power plants and with GE for repair and servicing of gas turbine in India. So far, about Rs 800 crore worth projects have been booked under the renovation and modernisation company.

BHEL has adopted a multi-pronged strategy to enable it face future challenges including maintaining technology edge in various products, enhancing exports,working towards a mechanism for enhanced financial support for projects in domestic and international markets along with improving internal project execution capabilities, cutting down cycle times and cost reduction.

The scrip is likely to touch Rs 425-450 mark in a year's time. Moreover, in the event of government dolling out budget sops for power sector, the scrip may see a sudden spurt.