BHEL Q2 Performance Review & Analyst Outlook

State-run Bharat Heavy Electricals Ltd. (BHEL) delivered a robust fiscal second-quarter performance, significantly surpassing street estimates and achieving 13-year high margins. Despite the strong fundamental quarter, which drove the stock up 5% to ₹464 and brought year-to-date gains to 60%, institutional analysts remain deeply polarized on the stock's future trajectory. Out of 21 analysts covering BHEL, the consensus is perfectly split: nine maintain a "Buy" rating, nine suggest a "Sell," and three recommend "Hold." Key Financial Highlights & Revisions Margin Expansion: BHEL showcased exceptional operational efficiency. The industry segment margin expanded by 420 basis points (bps), while the core power segment improved by 250 bps, culminating in a remarkable 595 bps gross margin improvement overall. Order Book Strength: The company's total order backlog stands at a formidable ₹2.5 lakh crore, reflecting a 17% year-over-year growth and ensuring sustained near-term execution visibility. Upward Estimate Revisions: Acknowledging the margin surprise, major brokerages have revised future earnings estimates upward. Jefferies raised its FY27–FY30 EBITDA estimates by 17%, while CLSA increased its FY27–FY29 Profit After Tax (PAT) estimates by 10% to 11%. Diverging Analyst Perspectives The Neutral/Optimistic View: Macquarie upgraded the stock from "Underperform" to "Neutral" with a revised price target of ₹420, citing strong execution traction and a robust backlog. UBS maintained a "Neutral" stance but aggressively raised its target to ₹500, noting the substantial margin beat, though it highlighted weaker Q2 order inflows due to the absence of large thermal contracts. The Bearish View: Both Jefferies (Target: ₹335) and CLSA (Target: ₹351) reiterated "Underperform" ratings, signaling a potential downside of up to 28%.