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Jayanta Mallick

KOLKATA, Feb. 6

THE power equipment stocks are witnessing a bull run in anticipation of wide-ranging power reforms. According to brokers and analysts, power equipment stocks have actively been improving on expectation of better orders from state electricity boards following securitisation of their debts, expected to be cleared by Parliament during the forthcoming Budget session.

Leading the pack are the counters of private sector ABB and public sector BHEL. While the ABB stock today peaked at Rs 309 on the Bombay Stock Exchange, a shade below its 52-week high of Rs 310, the BHEL stock created a new 52-week high of Rs 206.70 on the BSE. BHEL finally closed at Rs 204.45 (Rs 195.25) on the BSE with volumes of 7.67 lakh shares.

Since the closing of January 13, the stock has gained by Rs 34.10 or 20 per cent. Incidentally, on January 13, the counter had recorded a traded quantity of just 13,488 shares.

The BHEL stock attracted a volume of 12.41 lakh shares on the National Stock Exchange, up from mere 65,492 shares on January 13 at the bourse.

The ABB stock, on the other hand, today finished at Rs 305.65 (Rs 299) on the BSE with a volume of 89,245 shares. Since January 13, the counter has gained by Rs 27.60 or around 10 per cent. Volume-wise it has also grown substantially. On January 13, it had recorded a traded quantity of 586 shares on the BSE.

According to Mr Arun Kejriwal, a market analyst, both the stocks have been moving up on buoyant sentiment over the proposed piloting of the Electricity Bill during the Budget session. "Smart money has been driving the power equipment stocks for the last three weeks or so," he added.

Mr Ketan Thacker of Anagram Stockbroking said that for the BHEL counter, apart from the positive trigger of the proposed legislation, the main driving clue is provided by the record order book position (Rs 13,500 crore as on September 30, 2002). "The company has further won a few large orders in the last few months," he added. The power division of the company had contributed around 68 per cent of the total revenue of the company in 2001-02, Mr Thacker pointed out.

"The stock is still undervalued. At the current market price, the stock is trading at 10.2 times its trailing four-quarter earnings," he observed.

According to Ms Priya Madani, a market analyst, ABB at its current market price is trading at 13.3 times its fiscal 2001-02 earnings of Rs 22.9. The company's hefty order book position and its recent shift in focus — from projects to products and services — the stock has attracted both investors and speculators in the current run.

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