Bharat Heavy Electricals Ltd. share price target

BHEL has accumulated a strong orderbook in last three years but execution has been slow. Order inflow (OI) in FY24/25 was INR 780bn/ INR 920bn (vs. average OI of INR 210bn between FY19-23), respectively.

*over or under performance to benchmark index Bharat Heavy Electricals Ltd (BHEL), a public sector entity, is India's largest engineering company. It supplies power plant equipment such as gas turbines, generators, thermal sets, diesel shunters, turbo sets, hydro sets, power transformers, switchgears, circuit breakers and boilers. It also manufactures compressors, valves, rectifiers, pumps, capacitors and oil rigs, and undertakes castings and forgings. BHEL's Q2FY26 revenue increased 14.1% YoY to Rs. 7,512cr, driven by an 18.0%...

The stock is well placed to gain from the need for building base load thermal coupled with strong revenue visibility in the medium term. Q2FY26 performance: BHEL reported strong Q2FY26 results, turning profitable. Revenues grew 14% YoY to 7511 crore. With a drop in Employee benefits and other expenses by 260 and 310 bps YoY, EBITDA more than doubled to 580 crore vs 275 crore last year. With operational performance and rise in other income, PAT grew 3.5x YoY to 368 crore vs 106 crore last year. On a segmental basis Power (76% revenue mix) and Industry (24%) business revenues grew +13% and +18% YoY to...

Bharat Heavy Electricals Ltd (BHEL), a public sector entity, is India's largest engineering company. It supplies power plant equipment such as gas turbines, generators, thermal sets, diesel shunters, turbo sets, hydro sets, power transformers, switchgears, circuit breakers and boilers. The company also builds compressors, valves, rectifiers, pumps, capacitors, oil rigs, etc., and undertakes castings and forgings....

We revise our FY26/27E EPS estimate by -30.8%/-9.5% factoring in weaker pace of execution and higher other expenses. BHEL reported a dismal quarter with a flattish revenue of Rs54.9bn and an EBITDA level loss of Rs5.4bn due to sharp increase in other expenses. Continued execution challenges in the Power continue to drive robust order inflows, including ~14.6 GW of thermal orders won in FY25 and a Rs65bn equipment order won from Adani Power during the quarter. BHEL's active diversification into transmission, transportation, defense, and Oil & Gas is yielding results with award of the prestigious 6 GW...

an 8.9% YoY revenue growth despite strong order book, accompanied by a 44bps improvement in EBITDA margin to 9.2%. The company continues to benefit from the government's strong emphasis on thermal capacity addition,...

BHEL is the poster child of the Indian thermal power industry. India has recognised the need for building new base load plants despite energy transition.

Thermal equipment ordering is scaling the summit. In our view, it would be overly hasty to write an obituary for thermal or coal-based power yet.

BHEL reported order inflow (OI) of ~INR 200bn (YTD) while the outlook for OI for remainder of the fiscal remains strong. BHEL has commended 100% market share in the orders for thermal power plants in FY24 and Q1FY25.

Bharat Heavy Electricals Ltd. (BHEL) reported an order inflow (OI) of INR 780bn, 3x YoY. OI for the quarter was INR 420bn. FY24 saw strong order inflows worth INR520bn in power owing to 9.6GW thermal order wins and Industry orders worth INR 220bn.

BHEL has posted strong order inflow of INR 335bn in H1FY24 (>2x YoY) on the back of large order wins. However, we believe, this is the beginning of pickup in order inflow as India is likely to order more than 55GW of coal based thermal capacity in the medium term (Link), and given the duopoly nature of the market, BHEL is its natural beneficiary.

Ridiculed. Opposed. Self-evident – the three stages of all incontrovertible ideas. We have arrived at the third stage of the idea that adding thermal capacity is receiving almost universal acceptance. India needs additional thermal capacity – we were of the firm belief that India needed to increase additional supply to ensure a smooth energy transition while the street has been –ve on coal capacity addition.

BHEL reported its highest quarterly order inflow of INR 145bn in Q1FY24 and is L1 in ~INR 80bn worth of orders. We expect order inflow for FY24E and FY25E to be >INR 400bn aided by improving order prospects for thermal coal. We believe India needs to add 5GW per year for next 15 years.

The headline embodies a design principle (introduced by US Navy in 1960), which means that design for any system should be simple and elegant. Likewise, India’s power grid needs a simple solution like thermal power to ensure its reliability, which is currently challenged by the increasingly varying availability of renewable electricity.