Bharat Heavy Electricals Ltd shares fell 5% after reporting ₹4,000 crore in new orders for the September quarter, down significantly from ₹26,700 crore in the previous quarter. While the company posted strong revenue and profit growth, the sharp decline in booking momentum and high valuation have raised concerns about future growth sustainability.
BHEL shares fell 5% on Thursday as investors responded to a sharp slowdown in new contract wins for the company. The public sector firm reported order inflows of ₹4,000 crore for the second quarter ending September 2026, marking a significant drop from the ₹26,700 crore secured in the preceding quarter.
Interestingly, the order slowdown comes even as BHEL reported solid financial growth. Revenue for the second quarter rose 24% year-on-year to ₹9,300 crore. Operational efficiency also showed gains, with EBITDA climbing 77% year-on-year to ₹1,026 crore. The company’s EBITDA margin improved by 300 basis points to 11%, helped by a 600-basis-point increase in gross margins. For the first half of the fiscal year, revenue reached ₹17,000 crore, reflecting a 31% growth compared to the same period last year.
Investors are weighing this financial performance against increased competitive pressures in the thermal power equipment market. Companies like Larsen & Toubro, Thermax, and JSW Toshiba are intensifying competition, which may challenge BHEL's historical market dominance. To mitigate this risk, BHEL is actively diversifying into segments like defense, rail transportation, and coal gasification, though these new areas take time to scale up and contribute meaningfully to the bottom line.
Trading at 42 times its estimated FY27 earnings, the stock currently commands a valuation that leaves little room for operational misses. The pressure is now on the management to accelerate execution in the second half of the year. BHEL has achieved 2,260 MW of its 4,790 MW capacity target for the year, meaning the coming months will be critical for hitting its annual guidance.
Shareholders will be monitoring the pace of new order wins and project execution in the coming quarters. The key focus remains whether the second-quarter order slump was a temporary lull or a sign of tougher competitive conditions in the thermal sector.