Bharat Heavy Electricals Ltd (BHEL) reported a net profit of ₹400 crore for Q1FY27, moving from a loss of ₹460 crore in the same period last year. Revenue rose 40% to ₹7,700 crore, supported by a massive ₹2.6 trillion order book. Investors should track whether the company can maintain these improved profit margins and speed up the execution of its large thermal and non-thermal order pipeline.
Bharat Heavy Electricals Ltd (BHEL) has returned to profitability in the first quarter of fiscal year 2027, marking a shift for the state-owned power equipment manufacturer. The company reported a net profit of ₹400 crore, a notable change from the ₹460 crore loss recorded in the corresponding quarter of the previous year. This performance was driven by a 40% rise in quarterly revenue, which reached ₹7,700 crore.
Operational Improvements and Profitability
The company’s operating performance saw significant gains as it managed to improve its efficiency. The operating profit margin, which indicates how much money is made from core operations before interest and taxes, rose to approximately 6.5% from a loss-making position a year ago. A key factor in this improvement was the company’s ability to collect payments more effectively, with total collections growing by 34% to ₹11,000 crore. By improving its collection cycle, the company managed to reduce its financing costs, which fell to ₹140 crore from ₹180 crore in the same quarter last year.
Order Book and Business Segments
BHEL’s long-term business visibility remains strong, with its total order book reaching ₹2.6 trillion. The company added new orders worth ₹26,700 crore during the quarter. The power segment, which makes up the largest portion of the business, saw a 52% jump in revenue to ₹5,900 crore, with its profit margin turning positive at 10% compared to a negative 13% last year. Meanwhile, the industry segment—covering sectors like defense, nuclear, and rail—also contributed steady revenue of ₹1,800 crore, although its profit margin saw a minor dip to 14%.
Expansion and Future Risks
The company is currently working on large projects, including a ₹21,000 crore contract from NTPC for the Meja Super Thermal Power Project and a major export deal with the Dangote Petroleum Refinery in Nigeria. While these projects offer a clear growth path, investors should monitor the company's ability to execute these large-scale contracts without significant delays or cost increases, which are common risks in large engineering and construction projects.
Furthermore, the stock currently trades at a price-to-earnings (P/E) multiple of 44 times estimated earnings for FY27. This valuation is relatively high compared to its historical averages, suggesting that much of the optimism surrounding the company's turnaround and future order execution may already be priced into the stock. The primary focus for shareholders in the coming quarters will be whether the company can continue to reduce its working capital cycle toward its goal of 105 days and maintain these higher profit margins while scaling up its operations.