BHEL shares hit 52-week high after swinging to Q1 profit
Indian state-owned engineering firm BHEL has surged to a one-year high after posting its first profitable first quarter in eight years, though a rapid 65% six-month rally has split analyst opinions on valuation.
BHEL shares opened at ₹445.35 and soon rose 2.60% to a 52-week high, heading for a third consecutive session of gains. The rally follows a 4% jump in the prior session after the company reported a consolidated net profit of ₹376.71 crore for the June quarter, reversing a year-ago loss of ₹455.50 crore.
Total income surged to ₹7,911.86 crore from ₹5,658.07 crore, while EBITDA came in at ₹500 crore against a loss of ₹530 crore a year prior. This marks the company's first profitable first quarter since Q1FY19. The results reflect a sharp pickup in the execution of recently won contracts, which carry better pricing and boosted gross margins to 31%.
The order book stands at ₹2.6 lakh crore, representing 7.2 times trailing twelve-month sales, after the company secured ₹26,700 crore in new orders during the quarter. Beyond traditional power infrastructure, BHEL is expanding into new segments. The government has tasked the firm with manufacturing India's first indigenous 360 kW fast chargers for long-haul electric trucks and buses.
Divergent broker views
ICICI Securities maintained a buy rating and raised its target price to ₹520. "We believe this performance was driven by a pick-up in execution of projects won in the new cycle – these have better realisation. It has won new orders worth ₹2.7 lakh crore over the last three years. BHEL reported Q1FY27 order inflow of ₹26,700 crore, taking its order book to ₹2.6 lakh crore – 7.2 times trailing-twelve-month sales," ICICI said.
JM Financial also kept a buy rating with a ₹481 target, noting: "BHEL is among our top 5 picks as the 97GW of the original target for thermal additions now extends to 110GW+."
Not all analysts are convinced at current prices. PL Capital retained its reduce rating, raising its target to ₹368 despite revising FY27E and FY28E EPS estimates upward by 5.4% and 5.8%, respectively. "BHEL offers strong multiyear revenue visibility, with robust execution momentum and sustained investments in India's power and infrastructure sectors expected to support future growth. The stock is currently trading at a P/E of 44.2 times and 29.6 times on FY27E and FY28E, respectively," PL Capital noted. The stock has surged 65% over the past six months, sharply outperforming a 7% decline in the broader Sensex benchmark.
