Market Strategy


Vidya Bala | Updated on April 21, 2012 Published on April 21, 2012

The stock of power equipment maker BHEL was among the worst hit in the large-cap space, in the last one year. Falling 41 per cent over this period, BHEL had a tough time dealing with poor order inflows. This was the key factor affecting stock's performance.

In 2009, BHEL's almost-monopoly status was put to serious test by active participation by Chinese players in the Indian boiler, turbine and power equipment space. This was a result of a sharp pick-up in private participation in the power utility space.

Private power producers such as Lanco Infratech, Reliance Power and Adani Power preferred foreign players who offered cheaper equipments. Soon local players also entered the field. This resulted in BHEL conceding market share.

Robust order activity by both private players and state utilities still ensured that BHEL got a pie of the order inflows. But post 2011, concerns such as availability and pricing of coal and not-so-favourable power purchase agreement clauses resulted in a dip in new power projects. This was the key reason behind BHEL's poor order inflow status in FY12.

BHEL ended FY-12 with a 14 per cent increase in net profits. Order inflows at Rs 22,100 crore, stood reduced to a third of previous year's inflows.

Read further by subscribing to

The Hindu Businessline

What You'll Get

  • Web + Mobile

    Access exclusive content of the Hindu Businessline across desktops, tablet and mobile device.

  • Exclusive portfolio stories and investment advice

    Gain exclusive market insights from the Hindu Businessline's research desk.

  • Ad free experience

    Experience cleaner site with zero ads and faster load times.

  • Personalised dashboard

    Customize your preference and get a personalized recommendation of stories based on your intrest.

This article is closed for comments.
Please Email the Editor