With exit polls predicting a BJP-led National Democratic Alliance victory, the market expects the next rally to be led by public sector stocks. One stock which seems to be everyone's bet is Bharat Heavy Electricals (BHEL). The company is likely to be the biggest beneficiary of a revival in the economy and reforms in the power sector.

The stock is currently trading at Rs 256.5 and has recovered marginally after a recent technical correction. Earlier in the month, the scrip had sharply fallen from Rs 315 to a low of Rs 247. On Wednesday, the counter saw more buyers than sellers and the stock closed at Rs 277. Analysts expect the stock to cross the Rs 350-mark in couple of months' time.

The company has drawn plan to have an annual turnover of Rs 20,000 crore by 2006. The company plans to achieve this target through expansion of business both in India and abroad to establish it as a global player in the power equipment market. BHEL also plans to spend around Rs 1200 croreon modernising its manufacturing facilities over the next three years. The company's present turnover stands at Rs 6,700 crore. Although analysts expect the company's performance in the first-half of the current fiscal ending September 30, 1999 is unlikely to be impressive (mainly on account of East Asian crisis coupled with economic slowdown in India is still clouding the business prospects), the second half should see the company's margins improving.

The profit margins are likely to be under pressure in short term as the company will be offering voluntary retirement scheme to its employees, but this will have an healthy effect on the company's bottomline in the long run.The market also expects the main push to the turnover to come from exports. Exports currently account for around 4 per cent of the total turnover.

Analysts expect the figure to rise to 10-12 per cent in next three years.Aty present, the government holds 67.7 per cent stake in BHEL. Divestment Commission has recommended privatisation ofthe company through sale of 20 per cent of the government equity to financial institutions. Once this happens, then the stock will undergo a re-rating.

The company posted a net profit of Rs 569 crore in 1998-99. For the first half of the current fiscal, the company is expected to report a net profit of Rs 310 crore on a turnover of Rs 3600 crore.

Infotech Enterprises likely to rally

Thanks to the software craze and completion of all formalities to acquire Cartographic Sciences, a fully owned Indian subsidiary of US-based Analytical Surveys Inc, Infotech Enterprises is likely to witness a rally. The stock recently crossed Rs 600-mark and after a correction it is currently trading at Rs 550. Analysts expect the stock to double by March 2000. Infotech Enterprises is a leading player worldwide in CAD and GIS. The acquired company not only have synergies with Infotech Enterprises' present business line but under the agreement Analytical Surveys Inc will guarantee a minimum business of Rs 142 crore fora five year period beginning October 1999. For fiscal 1999, the company reported a net profit of Rs 6.48 crore on a turnover of Rs 21.8 crore.

In the recent past, the company had acquired London-based GIS software company - Dataview Solutions Ltd. Dataview Solutions is now Infotech's fully owned subsidiary. To finance these takeovers, the company has privately place its shares with foreign and domestic institutional investors. Post placement, the equity has risen by around Rs 1-1.5 crore.

The GIS industry which is at its infancy (estimated at about $ 1.4 billion) is expected to grow at a rate of 25-30 per cent per annum. Thanks to acquisitions and growing business, Infotech Enterprises is likely to report a three to four fold growth this year. The company has also forayed into the relatively higher margin photogrammetry segment. This means the company will now move towards aerial photography and satellite imagery from the traditional land surveying business. This explains the extraordinarily high PE of139 times. Still, punters feel one could enter the counter for long term returns.