BHEL

FY26/27E EPS estimate by -31.6%/-12.7% accounting for lagging execution pace. BHEL delivered a muted performance for the quarter, reporting an 8.9% YoY revenue growth despite strong order book, accompanied by a 44bps improvement in EBITDA margin to 9.2%. The company continues to benefit from the government's strong emphasis on thermal capacity addition, securing ~14.6 GW of thermal orders in FY25. In the Industry segment, BHEL’s strategic shift towards non-thermal areas, particularly in HVDC, has begun to yield results, with two major orders during the year. Additionally, emerging opportunities in Green Hydrogen, Coal Gasification, and Defence Indigenization—driven by supportive government policies—are expected to open up new growth avenues. With a robust order book of Rs1.9trn, BHEL has strong multi-year revenue visibility; however, the pace of execution remains a critical factor to watch. Outlook We roll forward to Mar’27E and downgrade the stock from ‘Accumulate’ to ‘Hold’ given the slower pace of execution and recent rally in stock, with a TP of Rs237 (Rs226 earlier) valuing the stock at a PE of 22x Mar’27E (22x Sep’27E earlier). Downgrade to ‘Hold’.