We visited BHEL’s project site at Jhajjhar, Haryana, for a ground-level feel of activity. This is a large 1,500 MW site (three units of 500 MW each).
It belongs to the Aravali Power Co., 51% owned by the National Thermal Power Corp. (NTPC), 25% by the Haryana government. This project has been fast-tracked since it is expected to start supplying electricity in time for the 2010 Commonwealth Games.
Against planned execution of 21% of the project, Bhel has executed 13% due to delays in other parts of the project. Despite this, however, the company is confident of completing its part on time.
While the project has been placed on a fast track some challenges remain due to possible delay on others’ part. The areas of concern are obtaining canal water, the ashhandling plant and a railway feeder line for coal supplies.
Judging by the site area, it can easily accommodate 2x500 MW units, which was also confirmed during our visit. When this happens, orders for boilers and steam turbines would most likely be placed with BHEL.
We maintain our HOLD rating and target price of Rs1,418, valued at 16x FY10e earnings.