As soon as market starts trading at its 52 week high we hear alarm bells ringing and many investors think its time stay away from market and wait for consolidation. Suddenly market resists to fall down and investors start feeling that it won’t go down and they start gaining confidence and come back to participate in it.

But, “focusing on price is speculating.” If we look back in the history then all the extraordinary businesses have always gone beyond and have created new highs.

Looking at the NIFTY index when I comment that, “it is overpriced…” it means that most of those 50 businesses are very highly overpriced and I won’t be interested to buy them. BHEL is the only one company which we feel is trading at discount to its intrinsic value.

But there is a reason behind BHEL trading at lower levels. As per consensus reports, BHEl is expected to report 10% less profits for the year end 2013. The report also mentions that for the next year too they will under perform by 15% in terms of their net profits.

We calculated BHEL’s intrinsic value for the year end 2012 as Rs 356 for each share and expect its intrinsic value to fall down to Rs 263 for 2013 and Rs 205 for 2014 on the basis of consensus report.

It’s your job to dig more about this business to believe in consensus reports.

Value operations private fund does not own any shares of BHEL.