BHEL delivered a revenue growth of 16.4% YoY with Ebitda margin expanding by 225 basis points YoY aided by lower other expenses (vs higher base in Q3 FY25) partially offset by decrease in gross margin.
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PL Capital Report
PL Capital has revised its earnings forecasts for Bharat Heavy Electricals Ltd., cutting FY26E and FY27E EPS estimates by 18.9% and 4.3%, respectively, citing a slower execution pace despite a strong order backlog, normalized provisioning levels, and moderated order inflow trends.
The brokerage noted that BHEL delivered a steady operational performance, posting 16.4% YoY revenue growth in the latest quarter. Ebitda margin expanded by 225bps YoY, aided largely by lower other expenses compared to the elevated base in Q3FY25. This benefit was, however, partially offset by a decline in gross margins.
Execution in the power segment remained soft, translating into ~13% YoY revenue growth despite a healthy Rs 1.7 trillion order backlog, supported by recent Rs 66.5 billion EPC package win (1×800MW) from NTPC, reinforcing BHEL's positioning in the thermal space.
In contrast, the Industry segment delivered another strong quarter, with 27.4% YoY revenue growth driven by robust traction across transmission, transportation, oil and gas, and defence verticals. However, order inflows in this division moderated sharply to Rs 16.3 billion, compared with ~Rs 57 billion in Q3 FY25—a decline largely attributed to last year's unusually high base.
While near-term challenges around execution intensity persist, a robust pipeline and a gradual shift towards non-power opportunities with rise in public,private capex, BHEL is well placed for sustained growth.
The stock is currently trading at a P/E of 28.2x/20.3x on FY27/28E earnings. The brokerage has maintained its ‘Hold' rating, valuing the stock at 22x Sep'27E EPS, unchanged from its prior methodology, and revised its target price slightly to Rs 245 (from Rs 250 earlier).
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