BHEL LTD.,

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BHEL LTD.,

• We recommend to Buy with a price target of 2900
  3600.
• Buying Level 2050-2150.
• Target 2600-2900-3600.
• Support levels 1900-1950.
• Resistance 2400.
• Technical Out Look
• The scrip has taken a strong support at 2000
• levels which acts as 23.6 fibonocci levels
  from top .
• The scrip has also taken trend line support at
  these
• levels and if crosses 2150 levels and closes,
  will zoom
• to the major resistance at 2400.
• if crosses 2400 on weekly close will attain
  short and
• long term targets respectively.

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Company Outlook

• We have noticed that several projects (Talwandi
  Sabo 1,200 MW in Punjab and
• Bhadrawati/Chandrapur 1,000 MW in Maharashtra)
  earlier envisaged to be
• Developed by state electricity generation
  companies (as per February 2007 report
• of working group on power) have been offered to
  the private sector under the
• tariff-based bidding route.
• We believe that state governments have several
  incentives to promote private
• investments in lieu of their own(a) they can
  source power at most competitive
• rates arrived at on basis of competition and (b)
  they can withdraw own
• investments from power generation sector to
  focus spending on other social
• sectors such as education and health etc.

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Business Outlook
Land acquisition, coal linkage and other
clearances, payment security remain as
significant hurdles before these projects become
a success We believe there are significant
hurdles before these projects become successful
such as land acquisition, coal linkage and
environmental clearances. For instance, the RFQ
for a 1,000-MW project in Karnataka states that
while the government would try to facilitate coal
linkage and has taken up the matter with central
government, ultimate responsibility for fuel
arrangement lies with the successful bidder.
Other requisite clearances (environmental etc.)
are expected to proceed on similar lines. Payment
security for private sector investments in power
generation also depends upon improvement in the
financial health of state electricity utilities.
The problem would be compounded if there are
significant investments by the private sector as
the finance of state electricity utility
companies may not be in the shape needed to
provide reasonable comfort to several projects at
a time.
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Business Outlook

• Higher proportion of capacity addition by private
  sector potentially implies
• higher competition for BHEL
• We highlight that a higher share of the private
  sector in capacity addition implies
• potentially higher competition for BHEL. While
  central and state utilities are
• comfortable in placing negotiated orders on BHEL
  and accord a preference to
• BHELs equipment, private sector developers are
  more open to consider
• competitive equipment from other vendors based
  on pricing, performance and
• ability to meet deadlines. BHELs market share
  in the private sector projects has
• been lower at about 25 in the XIth plan
  projects awarded so far versus more
• that 70 market share in the state and central
  government projects.

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Financials
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exclusively for the clients of Venkataraman Co.
only. VENKATARAMAN CO., Stock Share
Brokers, New No.2 (Old No.52) Dr. Ranga Road,
Mylapore, Chennai 600 004. Web www.venkataraman
.com E-mail vnkco_at_vsnl.com