Bhel was favoured by FIIs on Thursday as they see the company gaining from the Electricity Bill expected to be passed shortly.

The stock of the state-run power equipment major edged up 2.94% to Rs 201 by 11:50 IST. It recorded volumes of over 407,000 shares on BSE by that time. Bhel has risen 14.2% to its current level from Rs 176 on 31 January 2003.

As per market talk, Morgan Stanley is an active buyer on the counter today as was the case in the last few sessions. Insurance companies, on the other hand, are selling on profit booking. As per market buzz, Life Insurance Corp, General Insurance Corp and New India Assurance were selling on the counter yesterday.

Despite the selling pressure, the stock has held ground . A series of positive developments have propelled the scrip higher. The more noteworthy being the expected order worth Rs 8,000 crore from NTPC Sipat and the forthcoming passage of the Electricity Bill in Parliament .

The Electricity Bill is seeking to abolish the current restrictions on power generators and aims at reforming the sector. Analysts say the bill will improve the health of state electricity boards. This, in turn, will help Bhel improve its financials as the power equipment major receives 60% of its revenues from SEBs.

Meanwhile, technical analysts feel the stock is attractive now as it has broken the long-term resistance barrier of Rs 196. If the stock holds above the Rs 200-mark, then it should witness a huge rally, till the Rs 240-level.

Last week, Bhel unveiled third quarter (ended 31 December 2002) results. It posted a net profit growth of 1.5% to Rs 81.33 crore, compared to Rs 80.15 crore in the corresponding period of the previous year. Total income increased by 14% to Rs 1,699.76 crore (Rs 16.99 billion) from Rs 1,490.17 crore (Rs 14.9 billion) in DQ 2001.

Meanwhile, analysts are hopeful that the company will post excellent results in the coming quarters following its strong order book position. Bhel's order book stood at Rs 12,850 crore (Rs 128.5 billion) as at the end of December 2002. The order intake is estimated to grow by 20% despite one large order from BSES worth Rs 2,850 crore (Rs 28.5 billion) getting postponed to FY 2003-04.

Bhel expects two large orders to compensate for this shortfall – Karnataka Power Corporation's 500 MW Bellary project worth Rs 1,000 crore (Rs 10 billion) and the 500 MW Birsingpur project promoted by the Madhya Pradesh State Electricity Board worth Rs 1,800 crore (Rs 18 billion).

Bhel is the largest engineering and manufacturing enterprise of its kind in India, and is one of the leading international companies in the field of power equipment manufacture. The Centre has decided to sell 17% equity stake in Bhel to bring down its holding in the company to 51% from 67.7%. The heavy industry ministry has granted its concurrence to the proposal for divesting 17% stake to the public, financial institutions and employees.