Engineering giant surges 86% from April lows; brokerages remain bullish with targets of up to ₹575 amid improving profitability and strong infrastructure outlook

Shares of Bharat Heavy Electricals Limited (BHEL) continued their stellar run on Friday, scaling a fresh all-time high after reporting a sharp turnaround in its June quarter performance. The public sector engineering major touched an intraday high of ₹446.50 on the BSE before trading around ₹443, extending its gains for the third consecutive session.

The stock has emerged as one of the strongest performers in the PSU space this year, rallying nearly 86% from its April 2026 low of ₹239.25. Investors have responded positively to the company's improving financial performance, record order book, rising foreign institutional participation and optimistic brokerage outlook, reinforcing confidence in India's capital goods and infrastructure growth story.

Q1 FY27 Delivers Strong Turnaround

BHEL reported one of its strongest quarterly performances in recent years, reflecting improved execution across projects and better operating efficiencies.

The company posted revenue of ₹7,697.7 crore during the June quarter, registering a robust 40.3% year-on-year growth compared to ₹5,486.9 crore in the same quarter last year.

The improvement was primarily driven by accelerated execution in the power business, which continues to account for nearly three-fourths of the company's revenue.

The most significant highlight, however, was the sharp improvement in profitability.

BHEL reported:

• EBITDA: ₹503.9 crore versus an EBITDA loss of ₹537.1 crore a year ago

• EBITDA Margin: Improved to 6.6% from -9.8%

• Profit After Tax (PAT): ₹381.9 crore

The company returned to profitability in the June quarter for the first time in eight financial years, indicating that operational restructuring and higher-margin project execution are beginning to yield results.

Record Order Book Strengthens Long-Term Growth Visibility

Another key driver behind investor optimism is BHEL's expanding order pipeline.

During the first quarter of FY27, the company secured fresh orders worth ₹26,745 crore, comprising:

• Power Projects: ₹22,625 crore

• Industrial Segment: ₹1,767 crore

• Exports: ₹2,353 crore

These additions pushed BHEL's total outstanding order book to a record ₹2.60 lakh crore, representing a 27% increase over the previous year.

The record backlog provides multi-year revenue visibility and positions the company to benefit from India's accelerating investments in power generation, transmission infrastructure and industrial development.

Foreign Investors Continue to Accumulate Shares

Institutional investors have also shown increasing confidence in BHEL's turnaround story.

According to the latest shareholding pattern, Foreign Portfolio Investors (FPIs) raised their stake to 9.5% during the June 2026 quarter, compared with 7.2% in March 2026.

This marks the third consecutive quarter of increased FPI ownership.

The trend has been consistent:

• September 2025: 6.2%

• December 2025: 6.3%

• March 2026: 7.2%

• June 2026: 9.5%

The sustained increase in foreign ownership suggests that global investors are becoming increasingly optimistic about BHEL's earnings trajectory and India's long-term infrastructure spending cycle.

Diversification Beyond Thermal Power

Although thermal power remains BHEL's core business, the company has been steadily expanding into several high-growth sectors.

According to its FY26 Annual Report, nearly 29% of total order inflows now originate from diversified businesses, including:

• Power transmission

• Rail transportation

• Defence manufacturing

• Nuclear projects

• Coal gasification

• Industrial equipment

• Export projects

This diversification is expected to reduce business concentration risk while opening new avenues of growth as India increases investment across strategic infrastructure sectors.

Government Capex Continues to Support Growth

BHEL remains one of the biggest beneficiaries of India's infrastructure expansion.

The government's continued focus on:

• Thermal power capacity additions

• Renewable energy integration

• Grid modernization

• Railway electrification

• Defence manufacturing

• Industrial modernization

is creating a strong pipeline of opportunities for the engineering major.

Industry experts believe that rising electricity demand, manufacturing expansion and infrastructure development will continue to support order inflows over the medium term.

Brokerages Maintain Positive Outlook

Following the company's impressive quarterly performance, leading brokerage houses reiterated their positive stance on the stock.

ICICI Securities

ICICI Securities has maintained its 'Buy' recommendation with a fair value target of ₹575.

The brokerage expects:

• Revenue CAGR of 30.5% between FY26 and FY28

• PAT CAGR of 90%

• Return on Capital Employed (ROCE) improving to around 16.7% by FY28

According to the brokerage, strong execution and healthy order inflows could continue supporting earnings growth over the next several years.

JM Financial Institutional Securities

JM Financial also maintained its 'Buy' rating with a target price of ₹481.

The brokerage highlighted that BHEL's June quarter marked the company's first profitable first quarter in eight years. Analysts also noted that improving gross margins and operating leverage indicate a higher proportion of newer, better-priced projects entering execution.

The brokerage further believes that India's expanding thermal power addition target—now estimated to exceed 110 GW—creates a favourable long-term demand environment for BHEL.

Technical Momentum Remains Strong

From a market perspective, BHEL continues to display strong technical strength.

The stock has consistently formed higher highs and higher lows since April, supported by increasing trading volumes and institutional participation.

Crossing its previous record high signals renewed bullish momentum, although analysts caution that short-term profit booking cannot be ruled out following the sharp rally witnessed over the past few months.

Investment Outlook

BHEL's transformation from a cyclical PSU engineering company into a stronger earnings-driven infrastructure play is becoming increasingly evident. Strong quarterly execution, expanding margins, record order inflows and rising institutional ownership have significantly improved investor sentiment.

While project execution, raw material costs and timely order conversion will remain important factors to monitor, the company's healthy balance sheet, diversified business pipeline and improving profitability position it favourably for sustained long-term growth.

As India continues to invest heavily in power generation, transmission, railways and strategic manufacturing, BHEL appears well placed to remain one of the key beneficiaries of the country's infrastructure expansion. If execution momentum remains intact and order inflows continue at the current pace, the company could sustain its earnings recovery and maintain its leadership position within India's capital goods sector.