BHEL: Bharat Heavy Electricals Limited has remained in focus among market participants after witnessing sharp price movements over the past few trading sessions. The stock experienced a steep decline followed by a recovery, driven by policy-related news, brokerage commentary, and fresh order wins. Despite short-term volatility, analysts continue to hold a constructive medium- to long-term view on the company, supported by improving execution, margin expansion expectations, and a robust order pipeline.
Shares of Bharat Heavy Electricals Limited witnessed a sudden correction after a key policy discussion triggered concerns across the power equipment sector. The stock fell nearly ten percent in a single session, reflecting nervous sentiment among investors. However, this decline was followed by a rebound in the subsequent trading day, indicating that the sell-off may have been overdone.
The correction was largely attributed to reports suggesting a possible removal of long-standing restrictions on Chinese power equipment manufacturers participating in Indian government contracts. These restrictions, in place for several years, had effectively limited competition from overseas suppliers and provided domestic manufacturers with a more protected operating environment. News around a potential easing of such norms sparked a sector-wide reaction, impacting most listed power equipment companies.
As part of the Atmanirbhar Bharat initiative announced in 2020, the Indian government introduced procurement restrictions on companies from countries sharing land borders with India. These measures were aimed at encouraging domestic manufacturing, improving self-reliance, and addressing security concerns. While the policy helped strengthen local players, it also had implications for cost competitiveness and project execution timelines, particularly for large public sector undertakings.
Brokerage assessments indicate that even if certain component-level restrictions are relaxed, the overall impact on domestic majors may remain limited. Analysts point out that Chinese manufacturers continue to face challenges in re-entering the Indian market at scale due to past execution issues, regulatory scrutiny, and strong domestic demand within China itself.
Several brokerage firms have reiterated positive recommendations on BHEL despite recent price volatility. According to analyst estimates, improving execution efficiency is expected to drive a steady recovery in profitability. EBITDA margins are projected to expand meaningfully over the next few financial years, supported by better project mix and higher capacity utilization.
Earnings per share are also expected to see significant growth as legacy low-margin projects near completion and newer, higher-margin contracts move into the revenue recognition phase. This transition is anticipated to play out from the latter part of the current financial year, with a more visible turnaround expected by the following fiscal period.
Some brokerages have described the recent stock reaction as unjustified, especially considering BHEL’s dominant position in thermal power equipment manufacturing. They maintain that the company’s strong order book, execution visibility, and strategic importance in India’s power infrastructure continue to support a favorable long-term outlook.
In the near term, financial performance may remain influenced by older projects that were secured at relatively lower margins. These projects have continued to weigh on profitability and quarterly results. However, analysts expect this pressure to ease gradually as these contracts are executed and closed.
From upcoming quarters, newer orders are likely to contribute more significantly to revenue, which could result in improved margins and overall financial performance. Market participants are closely tracking quarterly updates to assess the pace of this transition.
Adding to the positive narrative, BHEL recently secured a large order valued at approximately Rs 5,400 crore from Bharat Coal Gasification and Chemicals Limited. The project involves setting up a coal gasification and raw syngas cleaning plant for a large-scale ammonium nitrate facility in Odisha.
This project is particularly significant as it marks the first commercial deployment of BHEL’s proprietary pressurized fluidized bed gasification technology. The transition of this technology from research and development to full-scale execution is seen as a strategic milestone for the company. The contract also includes long-term operations and maintenance, providing sustained revenue visibility beyond the execution phase.
The recent order win has already contributed a substantial portion of the company’s projected order inflows for the current financial year. Analysts view this as a strong validation of BHEL’s technological capabilities and execution strength. Over the long term, the company is expected to benefit from India’s continued focus on power generation, energy security, and industrial infrastructure development.
While short-term stock movements may remain influenced by policy headlines and market sentiment, the broader fundamentals suggest a more stable and improving outlook. For long-term investors, BHEL’s positioning within the power and capital goods sector, combined with improving financial metrics, continues to make it a closely watched public sector enterprise.
