BHEL Q1 Results
Bharat Heavy Electricals Ltd (BHEL) reported a significantly widened Q1 net loss of ₹455 crore for FY26, compared to ₹211 crore last year, despite stable revenue. The disappointing results led to a 5% drop in BHEL’s share price. However, strong order inflows of ₹13,400 crore boosted its order book to ₹2.04 lakh crore, offering future growth potential. While investor sentiment remains cautious, several analysts continue to retain a ‘Buy’ rating amid a thermal power revival.
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Disappointing Financial Performance
Bharat Heavy Electricals Ltd (BHEL), India’s state-run engineering major, posted a consolidated net loss of ₹455.4 crore for Q1 FY26 (April–June 2025), up sharply from ₹211.4 crore in the same period last year, according to CNBC-TV18. Despite analyst expectations for a profitable quarter, BHEL’s revenue from operations remained flat at ₹5,486.9 crore, compared to ₹5,484.9 crore year-on-year.
This unexpected loss primarily resulted from a 98% spike in other operating expenses, which caused the operating profit margin to fall to -9.8%, down 670 basis points from -3.1% in Q1 FY25. As a result, BHEL’s stock price declined nearly 5%, closing at ₹229.80 on the NSE, as reported by LiveMint.
Robust Order Inflows Offer Hope
Despite the weak financials, BHEL delivered a strong performance on the order front. Order inflows surged by 42% year-on-year to ₹13,400 crore, significantly increasing its total order book to ₹2.04 lakh crore—roughly 7.2 times FY25 sales.
Notably, key orders included eight 315 MVA and eight 160 MVA transformers, a 500 MVA transformer for power transmission, and a 60 MW steam turbine generator for the mining sector. Additionally, BHEL made a notable entry into the space sector by securing a contract from NewSpace India Ltd for 5,733 units of 5Ah lithium-ion cells. On the global front, the company expanded its international footprint to 92 countries by winning an order for soot blower lance tubes in Guatemala.
These developments reinforce BHEL’s dominant position in the thermal power segment, where it commands over 90% market share, as highlighted by Nuvama Institutional Equities.
Analyst Outlook and Market Reaction
Market experts remain divided on BHEL’s prospects. Nuvama Institutional Equities retained its ‘Buy’ rating, albeit with a reduced target price of ₹335 from ₹360, citing optimism around the thermal power sector’s revival. The firm anticipates approximately 17 GW of new thermal projects being awarded over the next two to three years.
Similarly, JM Financial maintained its ‘Buy’ stance with a target of ₹278, projecting that EBITDA margins will improve from 4.4% in FY25 to 11% by FY28 as legacy projects conclude. In contrast, CLSA issued an ‘Underperform’ rating and lowered its target price to ₹198, pointing to execution delays and only 4% year-on-year growth in Q1.
Unsurprisingly, the market reacted sharply. BHEL’s share price dropped from a 52-week high of ₹305.8 to an intraday low of ₹228.12, marking a steep 21% decline since August 2024.
Challenges and Opportunities Ahead
BHEL faces significant operational headwinds, particularly from sluggish execution and elevated costs. Although legacy projects are nearing completion, newer thermal projects face delays due to customer clearances and regulatory challenges.
Nevertheless, the company’s strategic focus on diversification into non-thermal sectors—such as railways, defense, and green hydrogen—presents a promising growth pathway. With a pipeline of 25–30 GW in potential projects, opportunities appear substantial. Moreover, UBS projects a 1.6x order book growth by FY28, driven by ₹2.1 trillion in fresh inflows. They also forecast compound annual growth rates (CAGR) of 33% in revenue and 84% in EBITDA during the same period.
Investors are advised to closely monitor execution timelines, cost efficiencies, and developments in BHEL’s non-thermal segments to assess its turnaround potential.
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Looking Forward
Although BHEL’s Q1 FY26 results disappointed on several fronts, its impressive order inflows and unrivaled dominance in the thermal power segment suggest brighter prospects ahead. The company’s ability to improve execution, boost margins, and successfully tap into emerging sectors will be critical for regaining investor trust.
In the meantime, BHEL has proposed a ₹0.50 per share dividend for FY25, pending approval at the AGM on August 19, 2025. As the PSU sector garners attention, BHEL remains a stock to watch for long-term investors.
