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BHEL is one of India's leading engineering and manufacturing companies, showing positive movement in the stock market. As of 11:17 AM on 30 January 2025, BHEL's share price is ₹207.08, showing a rise of 5.46%. The company has a market capitalization of ₹71,817 crores and a traded volume of 12,630,346 shares today. BHEL stock continues to portray fluctuations in prices, providing many investment opportunities.
During the last trading session on January 30, 2025, BHEL stock opened at ₹201.85 and closed at ₹199.90, representing a small fall. The trading session saw a high of ₹201.85 and a low of ₹194.10 in the stock price, which revealed volatility.
BHEL shares have moved in a range of ₹335.40 to ₹185.20 over the last year. Thus, indicating sensitivity to broader market conditions and company-specific developments. BHEL stock has been highly volatile lately. However, the company's order pipeline and recent financial performance are promising indicators of long-term growth.
Prabhudas Lilladher has maintained an ‘Accumulate’ rating on BHEL shares but downgraded the target price to ₹226 from ₹260. It is due to increasing expense pressure, which has affected its margins despite excellent execution and order wins.
The company noted that BHEL order books are solid and shall support long-term growth prospects, especially in the power and industrial segments. However, operational efficiency and execution rate are critical to BHEL's short-term performance.
BHEL's Q3 FY25 results reflect strong revenue growth but rather lackluster margins. This reflects that the company does execute large projects with efficient cost management. The standalone revenue of the company rose by 32.2% YoY, at ₹72.8 billion. The rise is primarily due to effective execution in power and industry sectors.
The increase in other expenses restricted EBITDA growth. Though revenue increased, the EBITDA margin expanded by only 25 basis points YoY to 4.2%, missing expectations of 6%. PAT of ₹1.2 billion increased 169.4% YoY, with support from better operations and other income.
Sector growth may propel BHEL share price further:
1. The power segment increased revenue by 31.9% YoY to ₹55.6 billion.
2. The industry segment increased 33.4% YoY, with revenue reaching ₹16.9 billion.
BHEL’s order book remains robust, standing at approximately ₹1.6 trillion, which is 5.9 times its trailing twelve-month revenue. The company secured new orders worth ₹68.6 billion in Q3FY25, a notable increase from ₹25.7 billion in the same quarter last year. Noteworthy orders include a 3x800 MW supercritical thermal plant for Telangana Stage-II and several HVDC transmission projects in the industry segment.
The company has a diversification opportunity in higher-margin segments, including green hydrogen, coal gasification, and railways. That is expected to provide long-term growth. In the thermal space, competition would arise from companies like Larsen & Toubro.
BHEL’s power segment demonstrated improved EBIT margins of 11.2% in Q3FY25, up from 9.4% in the previous year. This growth is driven by large-scale thermal projects and infrastructure expansion.
The industry segment showed even stronger growth, with EBIT margins increasing from 1.6% to 6.2% YoY, supported by HVDC and transmission projects. This segment is benefiting from BHEL’s efforts to reduce reliance on traditional power generation.
Prabhudas Lilladher has revised its earnings estimates for BHEL, lowering EPS estimates on account of higher provisions and execution risks. However, long-term growth remains intact due to a strong order backlog and diversification strategies.
On the technical front, the share price of BHEL is consolidating around the ₹200 mark. Support levels are placed at ₹184 and ₹195. Resistance levels are placed at ₹210 and ₹226. A breakout above ₹210 may take the stock to the ₹226 target. Failure to sustain above ₹195 may signal further consolidation in the near term.
As power and industry sectors show positive signs, BHEL's growth in Q3FY25 remains impressive. However, constant cost increases are capping the company’s growth margins. BHEL’s large order book and focus on high-growth areas like green hydrogen and HVDC systems keep it on the right track for a long time.
Solid fundamentals and an attractive target price of ₹226 make BHEL shares a good accumulation opportunity for investors seeking long-term growth. However, operational efficiency and execution will remain key to the company's performance in the near term.
