BHEL OFS opens for retail investors:Share price drop narrows discount after ₹254 floor price set — should you invest?

The central government’s Maharatna PSU, Bharat Heavy Electricals Ltd (BHEL), has opened its Offer for Sale (OFS) for retail investors today, February 12. Through this OFS, the government is divesting a 3% stake, with an additional 2% available via the greenshoe option. Discount shrinks after share price fall The government has fixed a floor price of ₹254 per share. At the time of announcement, this represented an 8% discount to the then market price of around ₹276. However, BHEL’s share price declined sharply after the announcement and is now trading near ₹260, reducing the effective discount to just 2–3%. Because of the narrower discount, market experts believe the OFS is less attractive than initially expected, though it may still appeal to long-term investors. ₹355 target backed by strong order book Brokerage firm JM Financial has set a medium-term target price of ₹355, citing India’s long-term power requirements. The country aims to raise thermal power capacity to 340 GW by 2047, a segment where BHEL remains a key player. The company currently has an order book of ₹2.23 lakh crore, providing strong earnings visibility. Beyond thermal power, BHEL is also active in nuclear energy and coal gasification. India plans to increase nuclear capacity from 8.8 GW to 100 GW by 2047, and BHEL is the only domestic turbine manufacturer in this space. Valuation and execution risks remain Despite the strong order pipeline, Bonanza research analyst Abhinav Tiwari advises caution. He points out that return ratios such as ROIC and ROCE remain weak, even as the order book crosses ₹2 lakh crore. According to him, much of the expected recovery is already priced into the stock. Delays in project execution and broader pressure on PSU stocks could make fresh investments risky at current levels. Q3 profit jumps over 200% BHEL reported a strong operational performance in the December quarter. Net profit surged 206% year-on-year to ₹382 crore, compared with ₹125 crore a year earlier.
Revenue rose 16% to ₹8,473 crore, supported by improved execution and tighter cost controls. Key points to consider before investing OFS proceeds go to government This OFS involves the Government of India selling its existing shares, meaning the entire proceeds will go to the government and not to BHEL. As a result, there will be no direct impact on the company’s balance sheet or debt levels. Government retains majority control Currently, the government holds 63.17% stake in BHEL. Even after divesting up to 5%, it will retain a majority stake and management control. The disinvestment is part of the government’s broader effort to raise funds for infrastructure and development projects. Knowledge box: Key OFS terms explained