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Execution prowess supporting growth

Bharat Heavy Electricals Ltd (BHEL), India’s largest engineering company, manufactures power, industrial and trans

* The company reported Q2FY27 consolidated revenue of Rs. 9,300cr, up 23.8% YoY, driven primarily by improved execution across its order book, particularly in the power segment, alongside continued progress in its diversified businesses.

* Power segment revenue rose 16.9% YoY to Rs. 6,638cr, supported by thermal project execution and continued capacity additions.

* H1FY27 order inflow was ~Rs. 30,000cr, including ~Rs. 4,000cr in Q2FY27, led by wins across power, hydro, transportation and industrial businesses.

* EBITDA rose 76.6% YoY to Rs. 1,026cr and EBITDA margin expanded 330bps to 11.0%, driven by improved execution and profitability across power and industry.

* PAT increased 119% YoY to Rs. 821cr, as stronger project execution and revenue growth drove higher operating profit.

Outlook & Valuation

BHEL’s strong order book of Rs.2.58 lakh crore provides healthy revenue visibility and is expected to drive robust execution-led growth, with revenue/EPS projected to register 27%/79% CAGR over FY26-28. Improving execution across power and industrial businesses, coupled with operating leverage and better fixed-cost absorption, is expected to support EBITDA margin expansion and drive ROE improvement from 6.2% in FY26 to 15.6% in FY28. Its established engineering capabilities and diversified business portfolio reinforce its competitive positioning, while the resulting earnings transformation warrants a valuation re-rating. Therefore, we upgrade our rating BUY, with a revised target price of Rs. 453 based on 2.9x FY28E P/S.

Key Concall Highlights

* BHEL’s outstanding order book was Rs. 2.58lakh cr as of September 2026, providing strong revenue visibility and execution opportunities across the thermal and diversified business segments.

* The company is executing 80 Vande Bharat sleeper trainsets as well as expanding its presence in the railway segment through Vande Bharat maintenance and KAVACH projects.

* BHEL demonstrated strong execution momentum in Q2FY27, achieving key project milestones including 660 MW capacity addition at Udangudi STPP, 199 MW synchronization across hydro and industrial projects, full-load operation of Rahughat HEP in Nepal, and delivery of three upgraded SRGMs, contributing to 2,260 MW capacity addition during H1FY27 against the annual target of 4,790 MW.

* The company completed its equity infusion into the Coal India Limited–BHEL joint venture, which is developing a 2,000-tonneper-day ammonium nitrate plant under the coal gasification programme.

* Key Q2FY27 orders included the FR6B gas turbine, Heo and Tato-I hydro packages, 265 main traction transformers, and greenammonia and recycle-gas compressors.

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