BHEL Target Price Slashed to Rs 321 by Prabhudas Lilladher Research

Prabhudas Lilladher Downgrades BHEL Stock to 'Reduce'

In a recent research report, Prabhudas Lilladher has revised its FY28E earnings per share (EPS) estimate for Bharat Heavy Electricals Limited (BHEL) by +7.8%, attributing the improvement to enhanced execution and normalization in provision. The engineering company delivered a strong Q4FY26 performance, with revenue growth of 36.9% year-over-year (YoY), driven by robust execution of its order backlog.

Key Highlights from Q4FY26:

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

BHEL's Power segment remained the key growth driver, with revenue growth of ~54% YoY backed by execution of a healthy order book of ~INR1.7trn. The company has successfully commissioned 8.9GW of power capacity in FY26, reinforcing its positioning in the thermal space. The Industrial segment witnessed some moderation in growth, although order inflows remained healthy (~INR54bn) driven by across sectors such as transmission, transportation, process industries, and industrial equipment.

Order Book Strength

BHEL's robust order book of ~INR2.4trn offers strong multi-year revenue visibility. Recent easing in localisation norms for High Voltage Direct Current (HVDC) (Line Commutated Converter) is expected to support execution of key HVDC projects. However, sustained execution momentum and provision numbers remain a key monitorable.

Outlook and Recommendation

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

The stock is currently trading at a price-to-earnings (P/E) ratio of 40.4x/27.0x on FY27E/FY28E. Prabhudas Lilladher has rolled forward to Mar'28E and downgraded the stock from 'Hold' to 'Reduce', given the recent rally in the stock. The target price has been revised to Rs321 (Rs245 earlier), valuing the stock at a P/E ratio of 23x Mar'28E (22x Sep'27E earlier).