Whalesbook
Bharat Heavy Electricals Limited (BHEL) holds a substantial ₹2.4 trillion order book, providing significant revenue visibility for future years. Provisional figures for the fiscal year ending March 2026 (FY26) show turnover reached ₹32,350 crore, marking an 18% increase from the prior year. This growth is partly supported by the commissioning of 8.9 GW of thermal capacity.
However, the company faces challenges in its new order acquisition momentum. Total order inflows for FY26 amounted to ₹75,000 crore, a decrease of 19% year-on-year from FY25. The fourth quarter of FY26 saw a particularly steep decline, with order intake falling to ₹29,100 crore, down 67% from the same period last year. This sharp Q4 dip is largely attributed to a high comparative base, as FY25's fourth quarter included significant orders from the Adani Group.
BHEL and its peers in the capital goods sector are navigating a difficult cost environment. Geopolitical tensions have driven up prices for critical raw materials such as copper, which has risen 20% year-on-year, and aluminium, up 15% year-on-year. These increases affect operating expenses across the industry. While the sector benefits from favorable policies and government capital expenditure, companies like Larsen & Toubro (L&T) and KEC International are also contending with these rising input costs and potential project delays.
Despite these external pressures, BHEL projects strong future growth. It aims for a 33% compound annual revenue growth rate through FY28, potentially securing another ₹80,000 crore in new orders over the next two fiscal years. The company also targets a significant improvement in profitability, expecting to double its net profit and increase its Return on Capital Employed (ROCE) from the current 5-6% to 14-15% by FY28. Achieving these ambitious financial targets, which stem from a FY25 adjusted net profit of ₹631 crore on ₹28,339 crore revenue, will depend heavily on efficient execution of its large backlog and effective management of cost increases.
Analysts maintain a cautiously optimistic stance, with a consensus rating of 15 Buy, 5 Hold, and 2 Sell recommendations, and an average price target of ₹310. Brokerages cite BHEL's improving execution capabilities and the potential for substantial earnings growth derived from its substantial order backlog, supported by government spending and robust demand in the power sector. The ultimate measure of BHEL's success will be its ability to translate its large order book into margin-expanding profitability amidst these persistent cost challenges.