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Shares of Bharat Heavy Electricals Ltd. (BHEL), a leading public sector undertaking (PSU), tumbled nearly 5% in intraday trading on August 7, following disappointing results for Q1 FY26. The stock hit a low of ₹234.35, down 4.7% from the previous close of ₹239.65, marking its second consecutive day of losses. On August 6, BHEL had already lost over 3%.
BHEL reported a net loss of ₹454.89 crore for the first quarter of FY26, nearly doubling the ₹212.52 crore loss from the same period last year. The company's revenue remained stable at ₹5,486.91 crore, with only a slight increase from ₹5,484.92 crore recorded in Q1 FY25. Again, this flat revenue growth reflects weak execution in the quarter.
Expenses increased significantly as well; total costs were higher, from ₹340 crore in Q1 FY25 to ₹680 crore in Q1 FY26, likely due to a one-off provision. This, of course, resulted in an even larger decline in margins. The EBITDA margin was -9.8%, down from -3.1% year-on-year.
Despite weak quarterly results, analysts believe the future remains optimistic, focused on BHEL's large order book and growth opportunities. Nuvama Institutional Research also retained the 'BUY' call on the stock with a target price of ₹335 (down from ₹360 previously).
The firm stated that BHEL has a good order pipeline, especially in the thermal segment, where it has a 90%+ market share. This is likely to drive growth, with an estimate of 17 GW to be awarded as new orders over the next 2-3 years.
Similarly, JM Financial expects performance to improve from Q3 FY26 onwards, noting that BHEL’s order book, valued at ₹2,044 billion, is likely to grow to ₹2,250 billion by March 2026. The brokerage also predicted that the EBITDA margin could improve from 4.4% in FY25 to 11% by FY28.
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From a technical perspective, BHEL is facing short-term weakness. Anshul Jain, Head of Research at Lakshmishree Investment, stated that the stock has broken its established range of ₹240-₹270, indicating a bearish trend.
Jain expects the stock to move toward the next support zone in the ₹199-₹190 range. He advised waiting for a recovery above ₹240 with strong volumes before considering any buying opportunities.
Although after the BHEL Q1 results, the company is currently facing a short-term challenge, analysts are still positive on the long-term prospects given its sizeable order book and future projects. Short-term traders may find the stock under pressure until a recovery is seen. Long-term investors may want to maintain their holdings of the stock or purchase the stock at lower prices, but caution is advised in the near term.
