BHEL slips 4% after Q2 profit more than doubles

avy Electricals Limited (BHEL) fell around 4% on October 15 as investors booked profits a day after it reported a 119% year-on-year jump in Q2 FY27 consolidated net profit to ₹820.94 crore. The stock had risen 4.9% to ₹464 on October 14, when the results came out. Revenue from operations grew 23.81% to ₹9,300.35 crore. Operating EBITDA margin expanded to 11.0% from 7.7% a year ago. Profit came in well above the Zee Business estimate of ₹618 crore, and more than doubled from ₹376.71 crore in the June quarter. The order book stands at about ₹2.6 lakh crore. This was a genuine beat. Revenue, margins and profit all improved, and the order book gives years of revenue visibility. The fall today looks like profit-taking after Wednesday's rally, not a reversal of the results story. The concern is valuation and execution. The stock trades at a P/E of about 56, which already assumes strong earnings growth for years ahead. An 11% EBITDA margin is still thin for a capital goods company, so there is little room for cost overruns. With an order book this large compared with annual revenue, the real constraint is how fast BHEL can execute. The company also flagged ₹196 crore of overdue receivables from a customer in Sudan, though it considers them recoverable. Investors should watch quarterly execution speed, margin trends, working capital and cash collections, and fresh thermal power orders. The key question is whether BHEL can grow earnings fast enough to justify its premium valuation. Disclosure: I do not hold any position in Bharat Heavy Electricals Limited. This post is for informational purposes only and is not investment advice.