Bharat Heavy Electricals Ltd's (BHEL) shares fell 5% on Thursday, after hitting a new 52-week high of ₹464 on Wednesday. The U-turn in investor sentiment was in reaction to order inflows sliding to a multi-quarter low of ₹4,000 crore in the September quarter (Q2FY27) from ₹26,700 crore in Q1FY27.
The decline was due to a temporary lull in large thermal power orders. While BHEL’s order book at ₹2.6 trillion at the end of Q2 is equivalent to about 6.8 times its trailing twelve months revenue, which is robust, whether the Q2 decline is a blip or a trend is monitorable.
Its significant exposure to thermal power amid rising preference for renewable energy in India, has been a lingering concern for investors. Global research house CLSA cautions that the entry of Chinese suppliers, JSW Toshiba, L&T and Thermax into BHEL’s core thermal equipment segment question its market dominance, and its order backlog looks to have peaked, while the stock is pricing in a lot more. So far in CY26, the stock has rallied 55%.
BHEL fared well on other parameters in Q2FY27. Revenue rose 24% year-on-year to ₹9,300 crore, beating consensus estimates aided by execution ramp-up of newer and better-priced orders. Ebitda surged 77% year-on-year to ₹1,026 crore and Ebitda margin expanded over 300 bps year-on-year to 11% ahead of 8.5% consensus estimate, aided by 600 bps of gross margin expansion.
In H1FY27, revenue rose 31% to ₹17,000 crore while Ebitda increased to ₹1,530 crore against barely ₹44 crore a year ago. These positives prompted earnings upgrades by some domestic brokerages. JM Financial Institutional Securities revised its FY28 and FY29 Ebitda estimates upwards by 8.3% and 5.5%, respectively, adding that BHEL has started hiring after almost 15 years.