Buy Bharat Heavy Electricals; target of Rs 110: Edelweiss

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26 Aug, 2025 12:21

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Edelweiss's research report on Bharat Heavy Electricals

Bharat Heavy Electricals (BHEL) saw a jump in Q4FY18 gross margin which helped neutralise the wage revision impact. However, adjusting for forex loss/gain in FY17/FY18, EBIDTA growth at 3% was in line with revenue, implying flattish margin at ~5% levels. The company sustained the sharp drop in slow-moving orders, which now account for only 17% of order book vs. 40% last year and 21% in Q3FY18.

Outlook

While BHEL is trying to focus on efficiency- both in execution and recovery of debtors, benefits will only accrue gradually with overall improvement in demand and macros. Management focus on revenue scale up beyond 8-10% levels leaves scope for upside to our/Street’s margin and bottom-line growth estimates. Maintain ‘BUY/SP’.

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