Shares of Bharat Heavy Electricals Ltd (BHEL) have experienced a notable cooling period, falling almost 10% from their all-time high set on May 29, 2026. Amidst this profit-booking trend, global brokerage firm UBS has revised its rating on the public sector undertaking (PSU) major, downgrading BHEL shares to 'Neutral' from its previous 'Buy' recommendation.
Why UBS Downgraded BHEL
UBS's decision to downgrade BHEL stems from the stock's remarkable performance, which saw it outperform the Nifty index by a significant 60% over the past 12 months. The brokerage believes that the risk-reward profile for BHEL has become more balanced, and much of the anticipated order book expansion is now reflected in the stock's current valuation.
Positive Outlook Amidst Downgrade
Despite the downgrade, UBS maintains a positive long-term view on BHEL's operational prospects. The brokerage has increased its price target for BHEL to Rs 460, up from Rs 375, and raised its target multiples from 25x to 28x. This reflects UBS's expectation of continued steady order inflows, particularly from thermal power and industrial projects. The firm projects BHEL to secure new orders worth approximately Rs 1.36 lakh crore over fiscal years 2027 and 2028, leading to sustained order book growth. UBS also lifted its FY27/28E earnings estimates by 1-3%, citing higher earnings visibility.
Current Performance and Market Snapshot
The recent rally in BHEL shares has paused, with the stock currently trading below its 5-day, 10-day, and 20-day simple moving averages. On June 5, 2026, BHEL shares were trading 1.35% higher at Rs 395.20, with a market capitalization of Rs 1.36 lakh crore. The stock hit its record high of Rs 424.85 on May 29, 2026. Despite the recent correction, BHEL remains a significant performer within the PSU segment, having surged 55.39% in the last three months, 37% this year, and an impressive 440% over the past five years.