BHEL OFS Opens for Retail Investors: What It Means
The much-awaited BHEL OFS has opened for retail investors today, February 12, as the Government of India moves ahead with its disinvestment plan in Bharat Heavy Electricals Ltd (BHEL). The Centre is divesting a 3% stake, with an additional 2% available through the greenshoe option.
The floor price has been fixed at ₹254 per share. Initially, this translated into an 8% discount to the prevailing market price of ₹276. However, a sharp correction in the BHEL share price has reduced the effective discount to just 2–3%, with the stock currently trading near ₹260.
This change has altered investor sentiment and raised an important question — should you invest in the BHEL OFS at current levels?
Discount Shrinks After Market Reaction
When the OFS was announced, the offer looked attractive due to the wider discount. But as the stock price slipped following the announcement, the price advantage narrowed considerably.
Market experts now believe that the BHEL OFS may not offer strong short-term listing gains. Instead, it could be more suitable for investors with a long-term outlook.
Strong Order Book Supports Long-Term Story
Despite near-term concerns, BHEL’s fundamentals show improvement.
Brokerage firm JM Financial has set a medium-term target of ₹355, highlighting India’s growing power demand. The country aims to increase thermal power capacity to 340 GW by 2047 — a segment where BHEL remains a key player.
Key growth drivers:
Order book of ₹2.23 lakh crore
Expansion in nuclear energy projects
Participation in coal gasification initiatives
India plans to scale nuclear power capacity from 8.8 GW to 100 GW by 2047. Notably, BHEL is the only domestic turbine manufacturer in this space, giving it a strategic advantage.
Q3 Results Show Sharp Profit Growth
The company’s BHEL Q3 results reflect strong operational momentum.
Net profit surged 206% year-on-year to ₹382 crore
Revenue rose 16% to ₹8,473 crore
Improved execution and cost controls boosted margins
These numbers suggest operational recovery is underway, supporting the long-term growth narrative.
Risks Investors Should Consider
Despite positive triggers, analysts advise caution.
Bonanza’s Abhinav Tiwari notes that return ratios such as ROIC and ROCE remain weak despite a strong order book. He believes much of the expected recovery may already be priced in.
Other key risks include:
Execution delays in large power projects
Pressure on PSU stocks amid market volatility
Long-term structural shift toward renewable energy
Importantly, proceeds from the Government disinvestment will go entirely to the Centre, not to BHEL. This means no direct balance sheet strengthening for the company.
Government Retains Control
Currently, the government holds 63.17% stake in BHEL. Even after the OFS, it will maintain majority control. The disinvestment aligns with broader efforts to fund infrastructure and development projects.
Should You Invest in BHEL OFS?
Investors should avoid chasing the narrow discount. The opportunity appears more suitable for:
Long-term investors (2–3 years horizon)
Those betting on India’s thermal and nuclear expansion
Investors comfortable with PSU sector volatility
Short-term gains may be limited, but structural growth in India’s power sector could support upside over time.
As the BHEL OFS unfolds, market participants will closely watch subscription numbers and price action to gauge investor confidence in this Maharatna PSU.
