Buy Bharat Heavy Electricals; target of Rs 324: ICICI Securities

ICICI Securitie`s research report on Bharat Heavy Electricals

BHEL is the poster child of the Indian thermal power industry. India has recognised the need for building new base load plants despite energy transition. The industry has seen a flurry of new coal orders in FY24 and FY25. Therefore, it saw order inflow (OI) of INR 780bn/INR 925bn in FY24/FY25 (vs. average OI of INR 214bn between FY19–23). As a result, BHEL’s order book (OB) stands at INR 2trn. Besides, it is L1 orders for 6GW of coal-based power plants; we estimate the total order size from these projects at over INR 500bn.

Outlook

We estimate an OI of INR 800bn in FY26E. Thus, we expect a sharp ramp-up in revenues to follow from FY25–27E. During the quarter, BHEL reported revenue/EBITDA/PAT growth of 19%/103%/97% YoY. We reiterate BUY with a revised TP of INR 324 (INR 259 earlier).