BHEL delivered a healthy performance with revenue rising 14.1% YoY and EBITDA margin expanding 356bps YoY to 7.7%, aided by healthy execution across both Power and Industry segments. The Power segment grew ~12% YoY, supported by healthy execution of its order book (Rs1.8trn in Q2FY26), while thermal order inflow momentum remained elevated at ~Rs183bn including ~Rs140bn EPC packages order of 2x660MW project reaffirming BHEL’s positioning in the domestic thermal space. Industry segment maintained its growth trajectory (+18% YoY) driven by accelerating traction across transmission, transportation, oil & gas, and defense verticals. Industry’s order inflows improved sharply to Rs36bn (vs Rs17bn in Q2FY25). With a robust execution of order backlog and rise in public/private capex, BHEL is well placed for sustained growth. However, the increase in contract assets (~2% YoY to Rs290bn) and CFO of -Rs11.9bn in H1FY26 (vs -Rs9.7bn in H1FY25) will remain key monitorable in near term.
OutlookThe stock is currently trading at a P/E of 25.2x/19.0x on FY27/28E earnings. We roll forward to Sep’27E and maintain our ‘Hold’ rating valuing the stock at a PE of 22x Sep’27E (22x Mar’27E) with a revised TP of Rs250 (Rs215 earlier).
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