1:2 Bonus, 1:5 Split, 38 Dividends: Not BEL, But A Maharatna Defence PSU Stock Is Top Pick, For 14% Upside Ahe

A defence and a PSU, this one stock trading below Rs 270 is a hot bet. Who is it? Not the giant Bharat Electronics (BEL) but instead a large with Maharatna status. Drum Roll! Brokerage Prabhudas Lilladher has selected Bharat Heavy Electricals Limited (BHEL) as its medium-term technical pick, with the defence PSU stock likely to witness potential gains of nearly 14%. The target price is set at Rs 307 apiece. On September 17, BHEL's share price traded slightly volatile, however, the stock continues to be a multi-bagger in the long term.

At the time of writing, BHEL's share price traded at Rs 269.35 apiece, broadly flat on BSE in the opening bell of September 17. The stock's 52-week high and low are at Rs 335.40 apiece and Rs 113.50 apiece respectively.

YTD, and BHEL shares have gained nearly 35%, while in a year, the stock rallied by a whopping 112% so far.

What does brokerage Prabhudas Lilladher say about BHEL?

Vaishali Parekh, Vice President - of Technical Research at Prabhudas Lilladher said, "The stock has witnessed a steady slide in recent times, having corrected quite significantly and has been consolidating for the last 3 sessions, taking support near 258 zones just above the important 200 period MA of 255, with currently indicating a positive candle formation with improving bias."

Further, Parekh added that the RSI has arrived near the highly oversold zone and has indicated a positive trend reversal to signal a buy.

Accordingly, Parekh said, "With the chart looking very attractive and having much upside potential visible from the current rate, we suggest buying the stock for an upside target of Rs 307, keeping the stop loss of Rs 250 level."

BHEL is India's largest engineering and manufacturing enterprise, operating in the energy, industry and infrastructure sectors. The company was established in the year 1964 and since then it has been "Making in India" offering comprehensive products, systems, and services in various areas including power generation (thermal, hydro, gas, nuclear, and solar PV), transmission, transportation, defence, aerospace, oil and gas, and emerging sectors like battery energy storage systems and electric vehicle chargers. BHEL has a pan-India presence with 16 Manufacturing Units and 140+ project sites (including overseas).

The worldwide installed base of power-generating equipment supplied by BHEL exceeds 1,97,000 MW. With an extensive network of 16 manufacturing units, 2 repair units, 4 regional offices, 8 service centres, 15 regional marketing centres and a team of more than 29000 employees, BHEL commands a 55% share in India's total installed capacity of utility power segment (excluding renewables), which stands as testimony to its valuable contribution towards nation building. BHEL has also established references in 89 countries in all 6 inhabited continents, with equipment supplied for about 12,000 MW of power-generating capacity in overseas markets.

Furthermore, BHEL plays a crucial role in the strategic sectors of the nation, especially through its engagement in all three stages of India's nuclear power programme and as a supplier of critical equipment and services for defence and aerospace sectors for over three decades, including as a trusted supplier of Super Rapid Gun Mount (SRGM) naval guns - the Front Line Weapon for Indian Navy.

BHEL shares have also given significant rewards to its investors.

Dividend: Since August 2001, the company delivered 38 dividends. In the last 12 months, the dividend amount stood at Rs 0.2 per share. Current, dividend yield is at 0.09%.

Stock Split: BHEL has sub-divided its shares only once. In October 2011, BHEL shares turned ex-split in the ratio of 1:5, where the face value of Rs 10 was cut to Rs 2 per share.

Bonus Issue: Also, the company has carried two bonus rewards since 2007. The first bonus issue was of 1:1 in June 2007, followed by 1:2 bonus issuance in September 2017.