Shares of Bharat Heavy Electricals Ltd (BHEL) surged in the early trading session on Wednesday after the state-run capital goods player reported a strong set of performance in the December 2024 quarter. However, brokerage firms largely remain divided on the stock.
Bharat Heavy Electricals reported 124.5 per cent year-on-year (YoY) rise in its consolidated net profit of Rs 134.7 crore for the quarter ended December 31, 2024 as against net profit of Rs 60 crore in the year-ago period. The PSU's consolidated revenue from operations grew 32.3 per cent YoY to Rs 7,277.1 crore in Q3FY25 as compared to Rs 5,504 crore in Q3FY24.
BHEL's Ebitda grew by 40 per cent YoY to Rs 304 crore, while margin expanded 30 basis points YoY to 4.2 per cent reported period. The capital goods player's order inflow surged by 167 per cent from last year to Rs 6,860 crore, while its order book grew by 47 per cent YoY to Rs 1.6 lakh crore.
Following the Q3 results, shares of Bharat Heavy Electricals surged nearly 4.75 per cent to Rs 196.50 on Wednesday, commanding a total market capitalization of more than Rs 68,000 crore. The scrip had settled at Rs 187.60 on Tuesday, after hitting its 52-week low at Rs 185.20. Shares of BHEL have crumbled nearly 45 per cent from its 52-week high at Rs 335.40 hit in July 2024.
BHEL's 3QFY25 operational performance missed our expectation on the profitability front despite better than estimated execution, likely impacted by higher provision creation during the quarter. The 3QFY25 order was supported by order finalization in the industrial sector, leading to a robust order book. The business outlook looks promising, said Antique Stock Broking.
Business performance to further improve in FY26 as the recently bagged better-margin orders entered execution, leading to material improvement in the company's profitability. We believe BHEL will witness a meaningful reversal in its ordering cycle over the next 3-4 years, it added with a 'buy' rating. However, Antique trimmed its target price to Rs 300, from Rs 364 earlier.
BHEL’s strong execution (32 per cent YoY growth) and gross margins (volatile print) were negated by the return of other expenses to a double-digit share of sales. Aggregate order inflow in the power sector is aligned with our estimates for FY25 (13 GW) and will get tested in the next few years (15 GW run-rate assumed), said Kotak Institutional Equities.
"We broadly retain our FY27 estimates and revise FV to Rs115 (from Rs110) on roll-forward. The supplementary information note lacks details beyond the order inflow print, limiting the scope of analysis on profitability and working capital," it said, maintaining a 'sell' rating.
Morgan Stanley has maintained its 'overweight' stance on BHEL with a target price of Rs 325 apiece as it is impressed with a standalone revenue, better 5 per cent than estimates. However, CLSA has maintained 'underperform' on BHEL with a target price of Rs 166 apiece.