The retail tranche of the two day share sale will open for bids on Thursday after the non retail portion was subscribed 2.3 times on Wednesday, the first day of the issue. Bids were placed for more than 22 crore shares against the 9.4 crore on the block, prompting the government to activate the green shoe option.
The stock fell 5.6% to ₹260 on Wednesday after the floor price was set at ₹254 per share compared with its Tuesday closing price of ₹276, implying an approximate 8% discount.
JM Financial said the floor price in the OFS valued the stock attractively, and maintained a buy rating with a target price of ₹355 per share, valuing the company at 30 times FY28 estimated earnings.
The government is offloading up to 5% of its stake in BHEL via the two day OFS. Post the stake sale, the government will hold 58.17% in the company.
“The OFS appears more of a divestment exercise than a fundamental rerating trigger,” said Divyam Mour, research analyst at Samco Securities. “While the offer appears optically attractive, valuation and execution realities warrant careful consideration. We recommend only staggered participation for long term investors.”
BHEL’s order book has swelled from ₹89,813 crore in FY21 to ₹2,19,600 crore in H1FY26, lifting its book to bill ratio to 7.2 times amid a revival in thermal and infrastructure capex, he said. “At a trailing P/E (Price to Earnings) ratio of 108 times, the stock is pricing in meaningful operating leverage, sustained order inflows, and structural improvement in profitability,” said Mour. BHEL shares have risen over 30% in the past year, as against the 17% advance in the BSE Capital Goods Index.
Vinod Nair, head of research at Geojit Investments, said the OFS is attractive for retail investors on a long term basis. “The stock is currently trading at a 1-year forward P/S (Price to Sales) of 2.2 times, near its three-year average. valuations remain compelling. We maintain a positive long-term stance on the stock,” he said.