BHEL trades firm after 7% decline in 4 days; stock up 1% on successful OFS

With nearly 80 per cent of the order book anchored in the power segment, positioning the BHEL to benefit from India's renewed thermal capacity additions and infrastructure push, believe analysts.

BHEL share price today

 

Bharat Heavy Electricals (BHEL) stock was trading up 1 per cent at ₹258.45 on the BSE in Monday’s intra-day trade after the government successfully completed the stake sale offer for sale (OFS) last week.

 

In the past four trading days, between February 10 - February 13, the stock price of BHEL declined 7 per cent after the government announced a stake sale plan.

 

At 11:14 AM; BHEL was quoting 0.84 per cent higher at ₹257.85, as compared to 0.21 per cent rise in the BSE Sensex. A combined nearly 8.6 million equity shares changed hands on the NSE and BSE.

 

 

Government offload 5 per cent stake in BHEL via OFS

 

According to disclosure made by BHEL, the promoter, the President of India, acting through and represented by the Ministry of Heavy Industries, Government of India, offloaded 174.2 million equity shares representing 5 per cent of the total equity of the company via OFS through the stock exchange mechanism. The promoter sold these shares for ₹4,470 crore at an average price of ₹256.59 per share, data shows. CLICK HERE FOR MORE DETAILS

 

JM Financial, ICICI Securities view on BHEL

 

Analysts at JM Financial Institutional Securities and ICICI Securities maintain a ‘Buy’ rating on BHEL with a target price of ₹355 per share and ₹343 per share, respectively.

 

BHEL has an order book of ₹2.23 trillion including inflows of ₹45,900 crore in 9MFY26. Additionally, it is L-1 in 3x800 MW NTPC Telangana and 3x800 MW NTPC Meja-II, together valued at around ₹35,000 crore and are expected during Q4FY26 as per guidance from NTPC.

 

BHEL is currently trading at 23x FY28E earnings, while the OFS announced by the company was at a floor price of ₹254 per share, implying a valuation of 21x FY28E earnings. Analysts at JM Financial Institutional Securities believe the floor price values the stock attractively, as the brokerage firm estimate revenue / EBITDA / PAT to grow at a CAGR of 20 per cent / 62 per cent / 98 per cent during FY25-FY28E, as execution accelerates and EBITDA margins expand to 10.7 per cent in FY28E from 4.4 per cent in FY25, driven by operating leverage and changing execution-mix.

 

Further, analysts continue to believe that India’s plans to scrap curbs on Chinese firms bidding for government contracts as reported in the media will have little to no impact on BHEL. The government, as part of the “Atmanirbhar Bharat package”, imposed restrictions on bidders from countries that share a land border with India from participating in public procurement tenders, impacting PSU’s cost competitiveness and project execution. Removal of restrictions at components level (e.g., CRGO steel) will benefit PSUs like BHEL.

 

“India didn’t order any major new thermal power projects for 5-6 years. This has adversely affected the domestic supply chain ecosystem and certain organizational capabilities of BHEL. However, according to our channel checks, both are now beginning to revive. Nevertheless, any delays or policy flip-flops from the government could once again hinder the revival process and subsequent execution,” analysts at JM Financial said in the company update.

 

Meanwhile, BHEL’s strong order inflow of ~₹45,900 crore up to Q3FY26 and a robust outstanding order book of ~₹2.23 trillion provides high medium-term revenue visibility across multiple years of execution, with nearly 80 per cent of the order book anchored in the power segment, positioning the company to benefit from India’s renewed thermal capacity additions and infrastructure push, according to ICICI Securities. The order inflow momentum is expected to sustain as the CEA has outlined a thermal capacity addition target of ~97 GW by FY35, with incremental demand from replacement of ~37 GW of ageing thermal plants that will cross 35 years of life by FY32, the brokerage firm said.

 

Good accretion of orders and strong ordering pipeline will keep order inflows strong coupled with strong pick in execution from FY27E onwards. This will also help margins and return ratios to improve meaningfully over the next 2-3 years. Hence, we rate the stock 'Buy' with fair value of ₹343 (25x FY28E EPS), analysts at ICICI Securities said.  ===========================================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.