Whalesbook
Institutional Demand Pushes BHEL, SAIL to Multi-Year Peaks
Shares of state-owned giants Bharat Heavy Electricals Limited (BHEL) and Steel Authority of India (SAIL) reached fresh multi-year highs on April 27, 2026. BHEL's stock climbed to ₹356.50 with significant trading volume, nearing its all-time peak from 2007. SAIL's stock reached ₹185.20, its highest level since early 2011. This surge reflects growing confidence from institutional investors. Foreign Institutional Investors (FIIs) increased their stake in BHEL to 7.2% in the March 2026 quarter, up from 6.3%. Domestic Institutional Investors' (DIIs) holdings also rose sharply to 23.98% from 19.7%. FIIs have boosted their exposure in SAIL for five straight quarters, reaching 5.0% by March 2026, up from 2.6% in December 2024. Retail investor holdings in both firms have decreased, signaling a significant ownership shift to institutional players. Historically, such institutional buying has preceded substantial price gains. Similar accumulation in April 2025 led to 15-20% increases in comparable public sector companies the following quarter.
BHEL: Strong Order Pipeline and Margin Growth Potential
BHEL's rally is driven by its growing order book and expected improvements in profit margins. Analysts at JM Financial Institutional Securities have reaffirmed a 'Buy' recommendation with a revised target price of ₹393. Their outlook is based on an order book pipeline of 18/14GW, with growing visibility in non-thermal areas like High Voltage Direct Current (HVDC) systems, naval guns, and nuclear components. The planned commissioning of older projects should improve execution efficiency and profit margins. Analysts expect margins could reach the mid-teens in two to three years, supported by potential import approvals and the adoption of supercritical technologies. This operational improvement is expected to drive revenue growth of about 20% annually from FY25-28E, with significant EBITDA margin expansion. The stock currently trades at a forward P/E of 28x, with a market capitalization of ₹95,000 crore, presenting a discount compared to peers like L&T (P/E ~35x) and Siemens India (P/E ~40x). The consensus among analysts is largely positive, with an average target price around ₹380.
SAIL: Capacity Expansion and Favorable Steel Market
SAIL is benefiting from a strong domestic steel market and its strategic capacity expansion plans. India's steel spreads saw a sharp recovery in the March 2026 quarter, driven by robust demand, import duties, and rising raw material costs. Analysts expect SAIL's outlook to stay strong, with sustained demand and price recovery boosting profitability and supporting its large-scale capacity expansion. Technically, SAIL has broken out above resistance at ₹172, with chart patterns suggesting the medium-term uptrend will continue. The stock is trading above key moving averages, and its weekly RSI has generated a buy signal, with technical analysts projecting an upside target of ₹194-₹199 within the next three to four weeks. With a forward P/E of 12x and a market capitalization of ₹62,000 crore, SAIL is valued comparably to its domestic steel peers such as Tata Steel and JSW Steel.
Potential Risks and Challenges Ahead
Despite the current optimism, both BHEL and SAIL face risks. BHEL's dependence on government orders and the timelines for large infrastructure projects present project-specific risks. Achieving projected mid-teen EBITDA margins depends on successful technological adoption and favorable import policies, which are subject to regulatory changes. Additionally, BHEL's significant DII holdings (23.98%) could lead to higher volatility if institutions decide to sell. For SAIL, the steel sector remains cyclical, vulnerable to global economic downturns and volatile input costs like coking coal, despite recent spread improvements. While capacity expansion is positive, the significant capital expenditure could strain finances if demand weakens. Historically, the steel sector has experienced sharp cyclical swings, impacting profitability and stock valuations. Persistent raw material inflation or a slowdown in construction and manufacturing could reduce demand, pressuring SAIL's revenue and margins. Both companies are part of the broader Public Sector Undertaking (PSU) index, which has performed well, but their individual results depend on operational execution and sector trends.
Future Prospects
Looking ahead, analysts expect BHEL's order book to keep growing, driven by ongoing investments in power and infrastructure. Projected revenue growth and margin expansion are key factors for its re-rating. For SAIL, sustained steel demand, boosted by government infrastructure spending and housing development, is expected to support profitability and expansion. Brokerage consensus is positive for both companies, anticipating sustained performance. However, investors will closely watch the pace of growth and margin sustainability.