Bharat Heavy Electricals Ltd. Shares Rise on Better-Than-Expected Q2 Earnings Amid Mixed Analyst Views

Bharat Heavy Electricals Limited (BHEL) experienced a significant surge in its stock price, climbing over 5% on Thursday, October 30, following the release of its second-quarter financial results which exceeded market expectations across most key metrics.

Despite the positive earnings report, brokerage firm CLSA has issued an 'underperform' rating for BHEL shares. CLSA has set a price target of ₹198 per share, indicating an anticipated decline of 19.3% from its previous closing price of ₹245.39. The brokerage acknowledged BHEL's operational turnaround, noting a 14% increase in topline year-on-year and an EBITDA of ₹580 crore compared to a loss in the same quarter last fiscal. However, CLSA expressed reservations about the quality of this growth, attributing it primarily to non-cash forex mark-to-market gains. The firm also pointed out that BHEL remained loss-making in the first half of fiscal year 2026.

A positive aspect highlighted was the resurgence of fossil fuel orders, driven by India's emphasis on energy security, with BHEL's thermal business orders reaching 22 gigawatts (GW) in FY25.

In contrast to CLSA's view, Morgan Stanley maintains an 'overweight' rating on BHEL, with a price target of ₹258, close to the stock's current trading level. The broader analyst sentiment is divided, with eight analysts recommending 'buy', three suggesting 'hold', and nine advising to 'sell' the stock. The stock's intraday high of ₹258.50 brought it closer to its 52-week high of ₹272.10.

Impact: This news has a moderate to high impact on the Indian stock market. The mixed analyst ratings create uncertainty and potential volatility for BHEL's stock. Investors will closely watch future order book developments and the company's ability to convert growth into sustained profitability. The price movement indicates immediate investor reaction to the earnings, while analyst views shape medium-term expectations. Rating: 7/10

Heading: Difficult Terms Explained

Backlog-led growth: Growth in revenue or profit that is driven by existing, uncompleted orders or contracts. Topline: Refers to a company's gross revenue or sales, usually reported at the top of the income statement. EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation): A measure of a company's operating performance, indicating profitability before accounting for financing, tax, and non-cash expenses. Forex mark-to-market gains: Unrealized profits or losses on foreign currency assets or liabilities due to changes in exchange rates at the reporting date. These are accounting gains/losses that may not reflect actual cash flows. Energy security: The assurance of a stable and adequate supply of energy resources to meet a nation's economic and social needs. Thermal business orders: Orders related to power generation plants that burn fossil fuels like coal or gas. Gigawatt (GW): A unit of power equal to one billion watts, commonly used to measure the capacity of power plants. Underperform: An investment rating given by analysts suggesting that a stock is likely to perform worse than its industry peers or the overall market. Overweight: An investment rating given by analysts suggesting that a stock is likely to perform better than its industry peers or the overall market. Consensus: The general agreement or opinion among a group of analysts or investors regarding a stock's outlook.