BHEL shares ended 5% higher at ₹464 on Wednesday, up 60% YTD, after the company reported a 595‑basis‑point lift in gross margin for the September quarter – the sharpest gain in over two years. The jump came amid a 17% YoY rise in revenue, bringing the conglomerate’s market cap to ₹2.5 lakh crore, as noted in its filing.
Macquarie upgraded BHEL to neutral, lifting its target to ₹420 and citing a resilient order backlog and margin expansion. UBS, while still neutral, raised its target to ₹500, warning that the quarter’s order inflows were weak due to the absence of large thermal contracts. Jefferies kept its underperform call, setting a target of ₹335, and warned of a 28% downside potential.
CLSA echoed the bearish tone, maintaining a target of ₹351 and arguing that Chinese entrants like JSW‑Toshiba and L&T are eroding BHEL’s thermal dominance. The firm also highlighted that BHEL’s order backlog appears to have peaked, making the current price a steep 39‑times FY28 earnings estimate.
Segment‑specific data shows industry margins expanded by 420 basis points and power margins by 250 basis points, yet the overall order inflow remains sluggish. CLSA raised FY24 profit‑after‑tax estimates by 10–11% to reflect the margin gains but cautioned that the upside is limited by rising competition.
BHEL will release its FY24 results on 30‑June; investors will be looking for a confirmation of the Q2 margin trend and any signs of a rebound in thermal order inflows before setting the next policy for the stock.