The stock fell 9.51 per cent to hit a low of Rs 38.50 on BSE.
Citi has a target of Rs 34 on the stock, as it feels the stock has rallied too fast, too soon. The foreign brokerage said the valuations have turned unappealing, given just 4 per cent return on equity and risks to cash flows and profits. It sees tough times ahead for the state-run firm.
Shares of BHEL, which were trading at the lowest level since 2003, surged 80 per cent in the last three months. The selling on the counter earlier this year was so harsh that the company’s net cash position in May alone accounted for 70 per cent of its market-capitalisation (m-cap), and the receivable book stood at nearly five times its m-cap at Rs 38,000 crore.
The PSU is looking to offer 16,400 acres of landbank in integrated facilities, centrally located in major cities, industrial clusters and demand centres. MNCs eyeing India face a lot of problems in securing land.
“High receivables continue to pressure cash flows,” Citi said, adding that success in new areas will take time.