>BHEL(Angel Broking)

Bharat Heavy Electricals Ltd (BHEL), one of the largest Engineering and Manufacturing
Enterprise in India, dominates the Power Generation Equipment market of the country with
about 64% share of the Total Installed Capacity. The company is in the midst of a rapid
capacity expansion plan. It has already ramped up its capacity from 6,000 MW p.a. to
10,000 MW p.a. in December 2007 and is further scaling it up to 20,000 MW p.a. by
FY2012. However, going forward the company faces diverse set of challenges both from the
weak economic environment as well as the structural changes in the Sector, which could
limit further upside on the stock. At the price of Rs1,405, the stock is commanding
valuations of 15.2x FY2010E EPS and 9.4x FY2010E EBITDA. Given the overall
concerns, we Initiate Coverage on the stock with a Neutral View.

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