BHEL Shares Flat After 3% Profit Rise; Growth Pick-Up Falls Short of Expectations

Bharat Heavy Electricals Ltd. (BHEL) shares experienced muted investor response on the D-street after reporting results for the quarter ending March. The Maharatna firm recorded a single-digit surge of 3% in PAT (profit after tax) levels at Rs 504 crore, as against Rs 484 crore reported in the corresponding quarter of the previous fiscal.

The company's revenue from operations figure stood at Rs 8,993 crore, an uptick from Rs 8,260 crore recorded in the Q4FY24. Gross margin saw an improvement from 33% in Q4FY24 to 34% in the quarter ending March. Meanwhile, Ebitda margins stood at 9.2%, a minor rise from 8.8% recorded in the corresponding quarter of the previous fiscal.

At 11:30 am, BHEL shares were trading at Rs 248.91 price level, down by over 0.58% on the National Stock Exchange.

The record-high electricity demand resulted in an unexpected spike in order placements by power utilities. According to JM Financials, 60% and 25% of the current orders of BHEL (Rs 1.96 trillion) were booked during FY24/FY25. However, the execution process remains slow. The consolidated revenue figure surged 9% year-on-year (YoY), but was 16% below JM Financial's estimates.

"Considering the time-consuming revival of the dilapidated execution ecosystem and bunching of orders, BHEL reported consol net revenue of INR 89.9bn (+9% YoY, -16% JM Financials estimates) and an Ebitda of Rs 8.3 billion (+14% YoY, -20% JM Financials estimates) during 4QFY25," the brokerage firm said in its report.

BHEL Share Price Outlook

So far this year, the shares of the Maharatna firm have witnessed a single-digit rise of over 6% on the exchanges. In the last 6 months, the stock has soared by nearly 10%. However, on an annual basis, the company's shares have witnessed a double-digit decline of 22% on the NSE.

JM Financial has maintained a BUY rating on the stock, with a target price of Rs 281.

"We expect pick up in execution from FY26 (FY25-28, 20% revenue CAGR) supported by growing and now executable order book...as execution of legacy projects are nearing completion and industry orders-mix improves, Ebitda margin is likely to improve gradually from 4.4% in FY25 to at least 11% in FY28," the brokerage firm said.