$BHEL

$BHEL Bharat Heavy Electricals Limited is currently in a strong earnings-upcycle driven by India's thermal power capex revival, a massive order book, and improving execution. Key Positives 1. Record Order Book BHEL ended FY26 with an order book of approximately ₹2.4 lakh crore, providing multi-year revenue visibility. Order inflows during FY26 were around ₹75,000 crore. 2. Revenue Growth Accelerating FY26 turnover grew about 18% YoY to ₹32,350 crore, indicating that the company is finally converting its backlog into revenue. 3. Strong Profitability Improvement Q4 FY26 was particularly strong: Revenue up 37% YoY EBITDA more than doubled PAT up about 154% YoY to ₹1,283 crore Power segment margins improved sharply due to operating leverage and better execution. 4. Beneficiary of India's Power Capex Cycle India continues to award large thermal, nuclear, transmission and industrial projects. BHEL remains the dominant domestic supplier for many of these projects. Analysts expect the order pipeline to remain healthy over the next few years. Concerns 1. Valuation Is No Longer Cheap After the sharp rally, valuation has become demanding. Recent market reports highlighted: P/E above 100x at certain points P/B around 4–5x Stock trading well ahead of historical averages. 2. Execution Risk The market is now pricing in strong earnings growth. Any delay in project execution, margin pressure, or slowdown in new thermal orders could lead to derating. Business Standard specifically highlighted valuation and execution concerns despite strong results. 3. PSU Volatility Events such as government stake sales (OFS) can create short-term pressure on the stock. Earlier in 2026, a government OFS caused a sharp correction.