The government has indicated that it will not wait for the markets to improve to go ahead with the planned stake sale in PSUs including SAIL, NALCO and BHEL. where it plans to divest close to Rs 30,000 crore
L&T and the state-run Bhel are setting up domestic power equipment capacity and are keen on tariff barriers to imports to counter Chinese subsidies, zero-interest financing facility and tax remissions.
As many as six big companies including Bhel, SAIL, Oil India Ltd, Neyveli Lignite, Nalco, Hindustan Copper could see divestment in this financial year.
Unless order execution and capex cycle picks up, a further downside cannot be ruled out.
The Rajasthan government has scrapped tenders worth Rs 12,000 crore that were bagged by Bharat Heavy Electricals more than a year ago for two separate thermal power projects in the state
Last year, Bharat Heavy Electricals Ltd had sought the coveted Maharatna status but it did not meet some of the eligibility criteria.
While the Street may be happy with Bhel's performance, there is much to worry about in the medium term. Order inflow at Rs 22,096 crore is almost 63 percent below last year's inflow of Rs 60,507 crore.
Proposal for higher duty is aimed at providing a cushion to domestic equipment makers such as BHEL and Larsen & Toubro against competition from overseas manufacturers.
State-run BHEL has emerged the second-lowest bidder, while the JV between Larsen and Toubro and Mitsubishi Heavy Industries was placed third lowest.
Improving visibility on coal supply could ironically halt near-term order inflows.
With a negative visibility over the next two years, there is little reason for the stock to move higher.
L&T trades 2 percent higher at Rs 1026, Areva T&D trades 2 percent higher at Rs 153 and BHEL is up by 3 percent at Rs 244.
While the Sensex plunged 25 percent this year, these sector indices lost way more due to high inflation, high interest rates and slowing corporate earnings.