Target: ₹324
CMP: ₹243.70
BHEL is the poster child of the Indian thermal power industry. India has recognised the need for building new base load plants despite energy transition. The industry has seen a flurry of new coal orders in FY24 and FY25. Therefore, it saw order inflow (OI) of ₹78,000/₹92,500 crore in FY24/FY25 (vs. average OI of ₹21,400 crore between FY19–23). Some of the major orders BHEL received this year were for thermal power plants – Raipur Phase-II, Mirzapur Phase-I, Khavda Nagpur HVDC, Adilabad, Ukai, Koradi, Koderma, Sipat, Kawai and Mahan.
As a result, BHEL’s order book (OB) stands at ₹2 lakh crore. Besides, it has L1 orders for about 6 GW of coal-based power plants; we estimate the total order size from these projects at over ₹50,000 crore. We estimate an order inflow of ₹80,000 crore in FY26E. Thus, we expect a sharp ramp-up in revenues to follow from FY25–27E.
During the quarter, BHEL reported revenue/EBITDA/PAT growth of 19/103/97 per cent y-o-y.
We reiterate BUY with a revised TP of ₹324 (₹259 earlier). valuing the stock at 35x FY27E EPS of ₹9.2/share.
Risks: Delay in OI in FY26 and no major improvement in execution of slow-moving orders.
Published on May 19, 2025
