Segment wise, power revenue grew 17 per cent Y-o-Y and industry revenue grew 45 per cent Y-o-Y. Ebit margin for power was up 247 bps Y-o-Y at 13 per cent, while for industry business it improved to 19.5 per cent, expanding by 423 basis points Y-o-Y. Working capital came down to 141 days versus 164 days in financial year 2026 (FY26) due to better collection of ₹13,200 crore, up 33 per cent Y-o-Y. Lower cost of finance of ₹120 crore versus ₹200 crore in Q2FY26 and ₹140 crore in Q1FY27, was another beat. Higher other income, which grew 42.9 per cent Y-o-Y to ₹260 crore, also pushed up net profit.
The order book stood at ₹2.6 trillion. BHEL also announced a capex of ₹500 crore and started hiring in some categories after almost 15 years. A strong pipeline and good net cash (₹4,600 crore) are both positive signs as well. Most analysts are upgrading the stock, given better execution and clear visibility of future revenue.
The company received orders worth ₹4,000 crore during Q2FY27 (₹30,000 crore in H1FY27). The Y-o-Y inflow declined 82 per cent with a high base effect. The thermal to non-thermal mix of the order book stands at 73.0 per cent to 27.0 per cent.
Of the total order book of ₹2.6 trillion, ₹70,000 crore is from non-thermal sectors like nuclear, transmission, defence, transportation, coal gasification, hydro and services. Order inflow should be ₹60,000 crore in FY27 and higher in FY28. There are new scalable opportunities in nuclear and coal gasification.
Currently, 47,545 mega watt (Mw) of thermal capacity (including 4,845 Mw of stressed projects) is under construction. Contracts for 16,000 Mw have been awarded and another 34 Gw of projects are to be awarded as per the plan to add 97 Gw by 2032, which may be further upgraded. That's a stable pipeline in thermal.
BHEL added 2,260 Mw of capacity during H1FY27 against a target of 4,790 Mw in FY27. BHEL has announced ₹500 crore capex for additional manufacturing facilities for thermal and nuclear sets at its Haridwar plant. Further, the company has released a notification for recruitment of 660 artisans across nine manufacturing units in a follow up from an earlier notification for recruitment of 515 artisans in July 2025. Such recruitments last occurred in 2011 so the company may be addressing some key bottlenecks and constraints.
The power segment remained the key growth driver, registering 17 per cent Y-o-Y revenue growth, underpinned by execution of its robust order book of ₹2.1 trillion.
Order wins across hydroelectric projects, including Heo and Tato-I, along with an FR6B gas turbine order, further strengthen its presence across hydro and gas-based power generation. The industrial segment also delivered strong growth, with revenue rising 45 per cent Y-o-Y, while a non-thermal order book of ₹70,000 crore provides diversification options. Expansions into synchronous condensers, green hydrogen electrolysers, high voltage direct current (HVDC) energy transmission, green energy corridors, defence and rail mobility broadens the total addressable market.
Signs of better execution, margin recovery and diversification beyond thermal, all point at a better growth outlook, but timely sustained execution is a key monitorable. The large thermal power order pipeline, diversification into sectors like railways, defence, green hydrogen, coal gasification and growing exports all augur well. Disciplined working capital management will be another monitorable, though that also shows signs of improvement.
Most of the execution improvement came in the industry segment and gross margin is above guidance of 35 per cent. The capex of ₹500 crore is low, given the size of business and a balance sheet with good net cash and this could lead to capacity constraints. Industry wide challenges could result in slowdown in thermal project execution, which would obviously impact BHEL adversely. The entry of Chinese suppliers, JSW Toshiba, Larsen & Toubro and Thermax into its core thermal equipment segment means higher competitive intensity. The stock is up substantially, while several analysts are saying valuations are too high for comfort.
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