Trading at 17-year-old price, Indian PSU bids to draw China factories
Published On: Thursday, May 7, 2020 | By: Team KnowMyStock
Global multinational companies are looking to shift value chains out of China following the coronavirus-led disruptions, and India, which has so far lagged behind, wants its share of the pie in this big shift. To give 'Make in India' a lift, a domestic PSU firm has called for expression of interest (EOI) from foreign companies, which wish to use its currently idle factories. At Rs 23, shares of BHEL are trading at the lowest level since 2003. This is when the company’s net cash position accounts for 70 percent of its market-capitalisation (m-cap), and the receivable book stands at nearly five times its m-cap at Rs 38,000 crore.
Analysts said if things materialise, this will be favourable for the company, whose half the land bank remained unutilised thus far. Estimating the first such deal to take place only after 12-18 months, they expect the stock to see a re-rating soon.
BHEL could emerge as an engineering R&D services provider, a contract manufacturer, or a lessor of urban-area industrial land.
“This could be a test case of a central public sector enterprise monetising its assets to unlock value against government divestment. Success should determine the extent of stock rerating to its asset value,” experts said.
A strategic buyer could unleash working capital efficiency, which has blocked a substantial part of BHEL’s balance sheet, added the experts
Tags: Make in India BHEL PSU
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