ICICI Sec hikes BHEL target on improving fundamentals, strong order book

ICICI Securities has reiterated its ‘Buy’ rating on Bharat Heavy Electricals (BHEL), raising its target price to ₹370 from ₹324 earlier, citing a sharp improvement in fundamentals, backed by three consecutive years of strong order inflows and signs of an impending execution ramp-up. 

Three years of strong order inflows

Order inflows have seen a sharp turnaround. From an average of about ₹21,000 crore between FY19 and FY23, BHEL’s order inflow jumped to ₹80,000 crore in FY24 and further to ₹92,300 crore in FY25. FY26 is expected to follow the same trend, with projected inflows of more than ₹90,000 crore, according to ICICI Securities. This expectation is supported by orders already announced in the first half of FY26, totalling around ₹35,300–41,000 crore, and the company being the preferred bidder (L1) in two large thermal and coal gasification projects estimated at about ₹40,000 crore. As a result, analysts expect the order book at the end of FY26 to be roughly at ₹2.4 trillion, implying an 8x book-to-bill ratio and offering strong multi-year revenue visibility.  ALSO READ | Motilal Oswal sees 43% upside for Suzlon; strong outlook lifts stock 2%

Execution ramp-up likely from FY27

Despite the impressive order accumulation, execution has lagged in recent years, largely due to teething issues at newly built project sites. These challenges have slowed the conversion of orders into revenue, according to analysts. However, most of these issues are now being ironed out across key locations, and a ramp-up in execution is expected to begin from the second half of FY26, with a sharp improvement anticipated in FY27. Thermal orders won over the past two years account for nearly 80 per cent of the current order book by estimates, making the stabilisation of these projects critical to BHEL’s growth trajectory, note ICICI Securities.

Non-thermal portfolio adds diversification

BHEL’s ex-thermal portfolio continues to scale well and provides an important diversification lever beyond coal-based power, according to brokerage. Industry and transmission bids have consistently contributed more than ₹15,000 crore of annual order inflows. In the first half of FY26 alone, non-thermal order inflow stood at ₹93,000 crore, and the company is L1 in an additional ₹4,000 crore by estimates. BHEL remains a key beneficiary of India’s nuclear build-up, with a near-term opportunity of 2.8GW. Further upside is expected from opportunities in Railways (around ₹25,000 crore), coal gasification, defence, and hydro and pumped storage projects, collectively adding another growth engine alongside the core thermal business.  ALSO READ | Auto ancillaries to outpace OEMs, says Elara; check key drivers, top picks

Long-term tailwinds from coal and nuclear policy

The long-term demand backdrop for BHEL’s core offerings is strengthening as India balances decarbonisation with the need for reliable base-load power. Earlier, NTPC indicated plans to add more than 13GW of capacity between 2032 and 2037. Separately, media reports suggest that NITI Aayog is considering raising the country’s coal-based capacity target to 420GW by 2047. Demand from nuclear is also expected to be healthy, with a 100GW target by 2047. With older coal plants likely to retire and base-load demand rising, the likelihood of new coal and nuclear capacity additions beyond 2032 is increasing, which bodes well for BHEL’s long-cycle equipment and project business, according to analysts.

 

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