ICICI Securities's research report on BHEL
Bharat Heavy Electricals Ltd. (BHEL) reported an order inflow (OI) of INR 780bn, 3x YoY. OI for the quarter was INR 420bn. FY24 saw strong order inflows worth INR520bn in power owing to 9.6GW thermal order wins and Industry orders worth INR 220bn. The year saw a revival in thermal orders in India, with the country laying out bids for a total of 10GW, and BHEL had a 100% strike rate in the bids. It is expected that India will seek bids for the ordering of 10GW again over the next few years, leading to a healthy OI outlook. However, BHEL’s execution and gross margins were subdued, as the company is still executing legacy orders.
Outlook
We expect the impact of the legacy orders to wear out and the new orders to start contributing meaningfully H2FY25 onwards. We reiterate BUY with TP INR 370 at 40x FY26E.
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