What Drives the Share Prices of BHEL, Tata Motors, Tata Elxsi, and IRFC?

The stock market is complicated and constantly changing, with numerous elements affecting the value of shares. Investors and market analysts pay a lot of attention to companies such as BHEL, Tata Motors, Tata Elxsi, and IRFC, each being a titan in their industry. Together, they greatly impact the Indian economy, speaking volumes about their relevance. But why do their share prices remain so volatile? To answer this question, we must look more closely at the factors affecting each company. So, let’s decode the details behind the market movements of these shares. 

BHEL 

Sector: Power and Engineering

BHEL has become the largest manufacturer of power generation equipment in India. Thus, the share price is highly dependent on government policies and orders from the power and energy sector and on infrastructure development. The company fundamentally depends on public sector contracts and large thermal power projects.

Share Price Determinants of BHEL

• Government Policies: Since it is largely a government venture, the BHEL share price is reactive to changes in the funding of public sector investment in energy development. 
• Order Book: The nature and composition of BHEL’s order book impact the stock price. A long queue of the already contracted projects to be executed means that revenue is certain in the future, resulting in higher stock prices.
• Global Energy Trends: Global trends such as the rise of renewable energy utilisation or shifting to energy efficiency technologies may influence the company’s share price.

Tata Motors

Sector: Automobile

Operating in the Indian automobile sector, Tata Motors also owns the luxury automobile Jaguar Land Rover. This company’s stock price is affected by trends in both the local and international markets.

Share Price Determinants of Tata Motors

• Automobile Demand: Tata Motors’ share price is highly sensitive to the requirement for passenger cars and commercial vehicles in India. 
• Jaguar Land Rover Performance: Since Jaguar Land Rover brings considerable revenue to Tata Motors, a change in JLR’s business prospects, such as sales in Europe and America, would affect the market price per share.
• Commodity Prices: Increasing costs of raw materials like steel and aluminium necessary for manufacturing may undermine the company’s profitability and lead to a dip in the share value.

Tata Elxsi

Sector: Technology and Design

Tata Elxsi works across three verticals: automotive, media, and healthcare. The Tata Elxsi share price depends mainly on trends in the tech sector, such as AI and self-driving cars.

Share Price Determinants of Tata Elxsi

• Research and Development: Investment in new technologies like AI and IoT by Tata Elxsi significantly impacts its share price. 
• Global Performance: The company’s economic performance in the United States, Europe, and other countries can influence the price of shares adversely or positively.
• Business Fundamentals: As high-profit margins mark the technology and design sector, any earnings surprise, good or bad, will likely lead to stock volatility.

IRFC (Indian Railway Finance Corporation)

Sector: Financial

IRFC is the chief financial arm that provides financial assistance for developing various projects under Indian Railways. Since it is quasi-government, its stock prices follow the direction of factors concerning infrastructure development and government policies. 

Share Price Determinants of IRFC

• Government Spending on Railways: Since IRFC offers financing for Indian Railway projects, the share price is most influenced by the Indian government’s annual expenditure budget for upgrading the railway infrastructure. 
• Interest Rates: Since IRFC is a financial institution, the borrowing costs in the market also influence its share price. 
• Bond Market Movements: One of the mechanisms IRFC uses in raising capital is the issuance of bonds. Consequently, movements within the bond markets or shifts in the demand for its bonds also affect the IRFC share price.

Conclusion

The share prices of BHEL, Tata Motors, Tata Elxsi, and IRFC are sensitive to a combination of factors affecting the market and the individual company’s operations. As such, it is necessary to pay attention to these factors and apply them accordingly in the appropriate stock to predict price movements. If you want to track price movements in the market properly, don’t hesitate to use tools like Research 360 from the house of Motilal Oswal.