Bharat Heavy Electricals Ltd (BHEL) has seen its shares climb by an impressive 42% throughout April, capturing significant interest from brokerage firms. The state-run capital goods giant closed at Rs 347.45 on April 27, having hit a 52-week high of Rs 341 just days earlier. This surge has pushed the company's market capitalization above Rs 1.21 lakh crore.
Brokerages Optimistic on BHEL's Prospects
Brokerage firms remain largely positive on BHEL, highlighting its strong order book and expected financial growth. JM Financial, for instance, increased its target price for BHEL by 14%, noting the stock's significant rise. The firm believes BHEL's order book, with a pipeline of 18/14GW, has not yet peaked, and improved non-thermal visibility contributes to this outlook.
JM Financial anticipates that the commissioning of 8.9/10GW of legacy projects will drive an increase in both execution and margins. They project a significant expansion in margins to mid-teens over the next two to three years, aided by factors such as permission to import from China, changes in non-thermal product mix, and indigenization efforts. Easing working capital stress is also expected due to large customer advances and project commissioning. Valuing the stock at 32 times its P/E, JM Financial has set a revised target price of Rs 393 with a 'buy' rating.
Anticipation Builds for Q4 FY26 Results
While BHEL has yet to announce the specific date for its Q4 FY26 results or any potential dividend, market analysts are already releasing their previews:
- Kotak Institutional Equities forecasts BHEL's revenue at Rs 10,520.9 crore, marking a 17% year-on-year increase. They predict an EBITDA of Rs 914.7 crore (up 10% YoY) with margins around 8.7%, and a net profit of Rs 627.9 crore (up 24.6% YoY). Kotak expects revenue growth to be driven by the Power and Industrial segments.
- PL Capital offers a more bullish outlook, projecting revenue at Rs 11,358.5 crore (up 26.3% YoY) and EBITDA at Rs 1,185.2 crore (up 59.8% YoY). Their adjusted net profit estimate stands at Rs 797.2 crore (up 58.2% YoY). PL Capital attributes this growth to strong execution in the Power segment and recent order acquisitions, including a Rs 13,500 crore main plant package.
InCred Capital noted that BHEL's FY26 business update largely aligns with consensus revenue expectations, implying 21% YoY growth for Q4 FY26. However, they caution that order intake growth may slow down from a high base, given the increasing focus on renewable energy and nuclear projects. Despite this, a backlog of Rs 2.4 lakh crore provides visibility for the next five to six years.
Varying Brokerage Target Prices
Beyond JM Financial's 'buy' rating, other brokerages have also weighed in:
- Antique Stock Broking: 'Buy' rating with a target price of Rs 345.
- ICICIDirect: 'Buy' rating with a target price of Rs 343.
- PL Capital: 'Hold' rating with a target price of Rs 245.
- Kotak Institutional Equities: 'Sell' rating with a target price of Rs 115.
Investors are advised to consult with a qualified financial advisor before making any investment decisions, as market movements can be volatile.