NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
The brokerage has maintained Buy rating on Bharat Heavy Electricals Ltd. with a revised target price of Rs 450 (earlier Rs 370), implying a potential upside of 19%.
The brokerage has increased its multiple to 35 times (previously 30x) Key drivers remain: improved order book mix with legacy orders tapering off in its books leading to improved margins, along with a strong ordering outlook.
The brokerage noted that BHEL delivered a robust Q4 FY26 performance, with revenue growing over 35% YoY, while operating profit more than doubled, driven by improved execution and better margins. Net profit came in at around Rs 1,300 crore, significantly above estimates.
A key highlight was the sharp recovery in the power segment, where revenue rose 54% YoY, with Ebit margins expanding to 20% from 5% a year ago, indicating strong operating leverage. However, the industrial segment remained relatively muted with flat revenue growth and some margin compression.
The order outlook remains strong, with Rs 30,000 crore of order inflows in Q4 taking FY26 inflows to Rs 76,000 crore, and additional projects worth around Rs 40,000 crore where the company is the lowest bidder. The brokerage expects order inflows to remain above Rs 70,000 crore in FY27, marking the fourth consecutive year of strong inflows.
Looking ahead, ICICI Securities expects execution to grow at a 13% CAGR over FY26–FY28, supported by a strong order book and improving mix. Ebitda margins are projected to expand to 9.5% in FY27 and 14.2% in FY28, indicating a steady recovery in profitability.
The brokerage also highlighted structural tailwinds in the power sector, including the need for additional thermal capacity to meet rising demand, which is likely to drive sustained order inflows for BHEL.
Given the improving earnings trajectory, strong order pipeline, and better execution visibility, ICICI Securities believes BHEL is well-positioned for further rerating, supporting its positive stance on the stock.
Risks:
- Delay in order inflow in FY27; and
- dip in execution.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
