Buy Bharat Heavy Electricals; target of Rs 329: Geojit Financial Services

Geojit Financial Services research report on Bharat Heavy Electricals

Bharat Heavy Electricals Ltd (BHEL), a public sector entity, is India’s largest engineering company. It supplies power plant equipment such as gas turbines, generators, thermal sets, diesel shunters, turbo sets, hydro sets, power transformers, switchgears, circuit breakers and boilers. It also manufactures compressors, valves, rectifiers, pumps, capacitors and oil rigs, and undertakes castings and forgings. BHEL’s Q2FY26 revenue increased 14.1% YoY to Rs. 7,512cr, driven by an 18.0% YoY surge in the industry segment to Rs. 1,836cr and a 12.9% YoY increase in the power segment to Rs. 5,676cr. Order inflows for Q2FY26 stood at Rs. 35,000cr, down 14.8% YoY. The power segment declined 32% to Rs. 25,992cr, while the industry segment increased 239% to Rs. 9.383cr. BHEL contributed to the prestigious NASA-ISRO NISAR mission by supplying space -grade solar panels and lithium-ion batteries, highlighting its advanced engineering capabilities and technological credibility in space applications • EBITDA grew 111.2% YoY to Rs. 581cr in Q2FY26, driving an EBITDA margin expansion of 350bps to 7.7% due to a 42% decrease in other expenses to Rs. 237cr • PAT increased more than threefold to Rs. 375cr supported by a 56.9% YoY increase in other income to Rs. 175cr.

Outlook

Although, continued execution discipline and working capital optimisation are key near-term priorities, we are positive and upgrade our rating on the stock to BUY from HOLD, with a revised target price of Rs. 329, based on 2.4x FY27E P/S.