Morgan Stanley upgraded shares of Bharat Heavy Electricals Ltd (BHEL:IN) to Overweight from Equalweight, significantly increasing the price target to INR352.00 from the previous INR220.00. The upgrade reflects the firm's positive outlook on the company, citing strong coal ordering visibility and a lack of competition as key drivers for the decision.
The analyst at Morgan Stanley highlighted that Bharat Heavy Electricals is expected to complete its legacy contracts by the first half of the fiscal year 2027, which should enhance earnings and cash flow visibility. The firm anticipates that the company's stock might experience more volatility in the coming quarters compared to other Overweight-rated stocks due to potential execution volatility and the completion of legacy contracts.
Morgan Stanley's report also pointed to subcontractor supply-chain issues that could contribute to the expected volatility of Bharat Heavy Electricals' stock. Despite these challenges, the firm's revised price target suggests a bullish stance on the company's financial performance going forward.
The analyst's commentary underscores the expectation that Bharat Heavy Electricals will navigate through the existing challenges and emerge with stronger earnings. The firm's upgrade and price target adjustment indicate confidence in the company's ability to complete its legacy contracts and capitalize on the current market conditions.
Investors and market watchers will be keeping a close eye on Bharat Heavy Electricals' performance in light of Morgan Stanley's positive outlook and the anticipated volatility as the company works through its execution challenges and completes its legacy contracts.
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