BHEL also booked orders worth Rs 26,700 crore in Q1FY27, taking its order book to Rs 2.6 trillion. This is more than seven times its trailing 12-month revenue. The order book comprises power (81 per cent), industry (17 per cent) and exports (2 per cent).
Collections increased to Rs 11,000 crore, easing working capital needs. The positive Q1 net profit after several years was due to a combination of better execution and better realisation from executed orders. Ebitda stood at Rs 500 crore, compared with an Ebitda loss of Rs 540 crore a year ago. In part, Ebitda gains were also due to the reversal of some provisions. The rise in gross margin is also an encouraging signal.
Lower other expenses, down 42 per cent Y-o-Y to Rs 390 crore, and lower employee expenses, down 709 basis points Y-o-Y as a percentage of sales, were notable line items. Other income rose 24.5 per cent Y-o-Y to Rs 230 crore, while the tax rate remained largely unchanged at 25.5 per cent (25.1 per cent in Q1FY26).
Revenue from the power vertical was Rs 5,900 crore, up 52 per cent Y-o-Y, with an Ebit margin of 10 per cent versus minus 13 per cent a year ago. The industry vertical reported revenue of Rs 1,800 crore, up 12 per cent Y-o-Y, with an Ebit margin of 14 per cent, lower than 19 per cent a year ago. Collections rose 34 per cent Y-o-Y to Rs 11,000 crore. This led to lower working capital requirements and a lower financing cost of Rs 140 crore during the quarter, compared with Rs 200 crore in Q4FY26 and Rs 180 crore in Q1FY26. At the end of FY26, working capital stood at 164 days and could fall to around 105 days by the end of FY27.
The order book stands at Rs 2.6 trillion, up from Rs 2 trillion at the end of June 2025. Of this, Rs 70,000 crore comes from non-thermal businesses, including nuclear (Rs 12,000 crore), transmission (Rs 14,000 crore), defence (Rs 7,000 crore), transport (Rs 1,500 crore), coal gasification (Rs 8,000 crore), hydro (Rs 5,500 crore), and Rs 4,000 crore from spares and services.
On the thermal front, during Q1, BHEL secured an engineering, procurement and construction (EPC) order from NTPC for the 3x800 MW Meja Super Thermal Power Project (STPP). The project, valued at Rs 21,000 crore, is to be commissioned in 70 months. BHEL has also signed an export contract worth Rs 2,000-2,500 crore with Nigeria's Dangote Petroleum Refinery for eight gas turbines.
BHEL is a major beneficiary of the increased target for thermal capacity addition from 97 GW earlier to more than 110 GW, representing a significant multi-year pipeline. Currently, 39 GW of thermal projects are under construction, while 22 GW have recently been awarded and are yet to begin. Another 35 GW are under tendering or planning. NTPC and NALCO have also announced projects with a combined capacity of 15 GW. This has pushed planned thermal additions to more than 110 GW, and there could also be opportunities in nuclear and coal gasification.
There is, therefore, visibility of revenue for several financial years, given the large order book. Execution appears to have improved. Analysts are likely to upgrade revenue and margin estimates following the strong Q1 performance, given the multi-year opportunity across the power sector value chain, including high-voltage direct current (HVDC), green energy, defence and rail.
BHEL needs to execute efficiently while improving gross margins and cash flows. While the vendor base looks healthier, the government has also eased restrictions on the China supply chain, facilitating imports of key components such as rotors and special alloy tubes. BHEL is adopting improved procurement and manufacturing initiatives to reduce lead times.
Balance-sheet health, strong collections to reduce receivables, and momentum in execution are all key monitorables. As legacy projects are completed, profitability and operating cash flows should improve further. Given that BHEL is expanding into nuclear, coal gasification and green hydrogen, while also looking at HVDC, grid infrastructure, defence and rail mobility, it is likely to remain a key player through a long, policy-driven cycle of structural capital expenditure.
The stock has rallied and now trades at a price-to-earnings (P/E) multiple of 44 times expected FY27 earnings. This appears expensive and already discounts much of the expected improvement in performance.
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