Bharat Heavy Electricals Limited

Industrials — Specialty Industrial Machinery · NSE

₹434.60+₹0.35 (+0.08%)

DalalBaazaar Score

62 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Low

Driven by a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:02 pm

Understanding the Business

Company site ↗

The 60-second version of Bharat Heavy Electricals Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Bharat Heavy Electricals Limited operates as power plant equipment manufacturer in India and internationally. The company operates in two segments, Power and Industry.

IndustrySpecialty Industrial Machinery

SectorIndustrials

Employees39,784

Annual revenue₹32,360 Cr

How does it make money?

Turns over ₹32,360 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹9 left at the operating level before interest, tax and depreciation. Each of its 39,784 employees supports ₹81.3 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹81.3 lakh

Who are its competitors?

The closest listed comparisons in its industry are SIEMENS LTD, ABB INDIA LIMITED, LARSEN & TOUBRO LTD., HAVELLS INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 6.6% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE17.1%

What is the outlook?

17 analysts covering the stock expect revenue to grow about 31.4% and earnings to grow about 53.6% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+31.4%

Est. earnings growth+53.6%

Analysts17

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +46% while net margin moved +72% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+46%

Margin effect+72%

DalalBaazaar Score

62/ 100

Good

Weighted across six categories. Every point is explained below.

✗ ROCE of 6.6% is below 10% — capital is not working hard
• ROCE has been broadly stable
✗ EBITDA margin of 9.2% is thin — little cushion if costs rise
✗ Net margin of 7.6% is slim
• Revenue has compounded at 13.5% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

66/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

61/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

52.6x

3Y Median

173.2x

40 monthly readings · mean 193.2x · range 64.3x–358.7x

Sector Median

66.2x

median of 4 sector peers

🟢Current valuation is approximately 70% below its 3y median of 173.2x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 21% below the peer median of 66.2x.

vs. its own history

Cheap

173.2x median over 40 months · -70%

vs. sector peers

Cheap

66.2x median of 4 peers · -21%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

53.3x

PEG

1.46

What's Good / What's Bad

🟢 What's Going Well6

Margins are improving
EBITDA margin is up from 5.5% to 9.2% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on equity is rising
ROE has improved from 2.6% to 6.1%.
Return on capital is rising
ROCE has improved from 3.7% to 6.6%.
Very low debt
Debt/Equity of 0.22x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 50% over 3 years, from ₹5,454 Cr to ₹8,187 Cr.
🔴Receivables growing faster than salesFinancial
Receivables up 117% against revenue up 46% — sales are being booked faster than they are collected.
🟡Inventory building faster than salesFinancial
Inventory up 97% against revenue up 46% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 5.5% to 9.2%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 70% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 21% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹5,248 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 117% against revenue up 46%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 10% a year✓ 13.5% CAGR
Latest reported year was 23.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 7%✓ 9.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.8x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Interest cover stays above 3x✓ 3.8x
How much operating profit can fall before interest stops being comfortably covered.
5Free cash flow remains positive✓ ₹5,248 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

8 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 2 neutral · 3 weak

Market Cap

₹1.51 L Cr

Large Cap

Large, widely-covered business — typically the steadiest of the bands

P/E (Trailing)

52.6x

Expensive

Expensive — verify against sector peers

P/B Ratio

5.79x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹8.27

Profitable

Profitable on a per-share basis

ROE

11.3%

Moderate

Moderate capital efficiency

ROCE

6.6%

Weak

Low return on total capital employed

Debt/Equity

0.22x

Low

Conservative leverage

Revenue Growth (YoY)

23.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

118.5%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.32%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹2,716 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

26.9x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

2.6%

Weak

Assets generate little profit

Operating Margin

10.1%

Average

Average margins

Net Margin

7.6%

Average

Average bottom-line conversion

Current Ratio

1.67

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.92

Market-like

Moves roughly in line with the market

52W Range Position

87%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

431.3 / 425.6

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

55.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹22,136 Cr	₹22,921 Cr	₹27,355 Cr	₹32,360 Cr	+13.5%
EBITDA	₹1,228 Cr	₹1,022 Cr	₹1,554 Cr	₹2,975 Cr	+34.3%
EBITDA Margin	5.5%	4.5%	5.7%	9.2%	—
PAT (Net Profit)	₹637 Cr	₹282 Cr	₹534 Cr	₹1,600 Cr	+35.9%
EPS	₹1.88	₹0.81	₹1.53	₹4.6	+34.8%
ROE	2.6%	1.2%	2.2%	6.1%	—
ROCE	3.7%	2.9%	3.7%	6.6%	—
Total Debt	₹5,454 Cr	₹8,856 Cr	₹9,015 Cr	₹8,187 Cr	+14.5%
Free Cash Flow	-₹929 Cr	-₹3,945 Cr	₹1,888 Cr	₹5,248 Cr	—

🟢 Revenue has grown at 13.5% a year over 3 years.

🟢 EBITDA has grown at 34.3% a year over 3 years.

🟢 EBITDA Margin has risen from 5.5% to 9.2% over 3 years (+3.6 pts).

🟢 PAT (Net Profit) has grown at 35.9% a year over 3 years.

🟢 EPS has grown at 34.8% a year over 3 years.

🟢 ROE has risen from 2.6% to 6.1% over 3 years (+3.5 pts).

🟢 ROCE has risen from 3.7% to 6.6% over 3 years (+2.9 pts).

🔴 Total Debt has grown at 14.5% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹929 Cr to ₹5,248 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹76,186 Cr

Total Liabilities

₹50,039 Cr

Cash & Equivalents

₹1,083 Cr

Operating Cash Flow

₹5,837 Cr

Capex

-₹589 Cr

Shareholding (proxy)

Institutional Holding

22.7%

Insider Holding

59.8%

Corporate Actions

Next Earnings

14 Oct 2026

Dividend Rate

₹1.4

Ex-Dividend Date

17 Jul 2026

Analyst Consensus

Recommendations

9 Buy · 2 Hold · 8 Sell

Target Price (Mean)

₹436.79

+0.5% vs CMP

Target Range

₹140 – ₹633

Peer Comparison

Company	P/E	ROE
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%
LARSEN & TOUBRO LTD.	30.1x	15.2%
HAVELLS INDIA LIMITED	43.5x	17.1%

Recent News

2 positive2 mixed2 general

BHEL shares fall over 4% despite stellar Q2; CLSA flags rich valuations, JM Financial raises target

Moneycontrol.com, 15 OctAnalyst view

🟢Potentially positiveAn analyst opinion changing, which moves the price without changing the business.

'BHEL Has A 43% Downside': Top Brokerages See Frothy Valuation Hit Defence PSU Stock. Shares Fall 5%

NDTV Profit, 15 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

BHEL share price crashes 5% on profit booking after Q2 results: Buy or sell? Brokerages suggest this

TradingView, 15 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

BHEL Share Price at 52-week high: price and fundamentals

Univest, 14 Oct

Bharat Heavy Electricals Ltd. is Rated Buy

MarketsMojo, 18 Oct

BHEL Share Price Rises Nearly 5% as Q2 FY27 Profit Jumps 120%

India Infoline, 14 OctResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongFinancial Health · Growth

MiddlingProfitability · Risk

WeakBusiness Quality · Valuation

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 2 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Debt / EBITDA stays below 2x · see Key things to watch ↑