BHEL shares fall 4% as brokerages say Q3 gross margins drag on earnings

BHEL shares fall 4% as brokerages say Q3 gross margins drag on earnings

• BHEL shares fell 4 percent after missing Q3 estimates despite profit doubling
• Brokerages cut price targets but maintain Buy ratings due to margin concerns
• Q3 revenue rose 16 percent YoY to Rs 8,473 crore; profit up to Rs 390 crore

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Shares of Bharat Heavy Electricals Ltd's (BHEL) fell 4% to Rs 252.45 apiece on January 20 as brokerages said the firm missed estimates for third quarter results.

The shares are on track for third straight session of losses.

On Monday, the power equipment maker reported third-quarter consolidated revenue rose 16% YoY and net profit more than doubled.

Domestic brokerage JM Financial gave a "Buy" rating on the BHEL stock but reduced price target to Rs 355 from Rs 363 and said company missed its expectations on revenue, EBITDA margin.

JM Financial added the company's current focus on completion of 10.2 GW of pre-Talcher projects in 2026 is impacting margins.

Brokerage Nuvama gave a "Buy" rating and price target of Rs 353 and said co missed the PAT estimate by 26% as gross margins fell to 30.8% on the accelerated execution of low-margin legacy projects

"We are slashing FY26E EPS (earnings per share) by 21% on an operating profit margin cut to 6%, to reflect the bunched execution of legacy projects in H2FY26," said Nuvama.

In 2025, BHEL stock gained 25%.

The New Delhi-based company, which accounts for 55% of India's total installed power generation capacity, posted a profit of Rs 390 crore for the quarter, up from Rs 135 crore a year ago. The jump in profit was driven by "other income", which nearly doubled to Rs 219 crore during the quarter.

Project orders boosted revenue at its power equipment segment, its biggest business, by 13% to Rs 6,322 crore.

However, BHEL's expenses rose 13% to Rs 8,188 crore.

BHEL reported a 16% rise in third-quarter revenue on Monday, as limited competition in the power products category ensured strong sales despite weak electricity demand.

The manufacturer's revenue from operations rose to Rs 8,473 crore for the quarter ended December 31, up from Rs 7,277 crore a year ago.