BHEL shares may decline up to 54%, say analysts citing weak execution despite strong backlog
Published on 19/05/2025 02:30 PM
BHEL shares may decline up to 54%, say analysts citing weak execution despite strong backlogKotak Institutional Equites said the key disappointment from BHEL was weak execution in the key power segment at odds with the strong order backlog.By Shloka Badkar May 19, 2025, 2:30:00 PM IST (Published)2 Min ReadShares of Bharat Heavy Electricals Ltd (BHEL) fell 2% on Monday, May 19, as analysts projected a downside of as much as 54% on the stock.
Kotak Institutional Equities has a "sell" rating on the stock with a price target of ₹115 apiece. CLSA has an "reduce" rating on the stock and has raised its target price to ₹198 per share from ₹166 earlier.
Kota Institutional Equities said BHEL's fourth quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) was an 8% miss, adjusted for prior provisions reversed and supported by very strong industrial print that may not sustain.
It said the key disappointment was weak execution in the key power segment at odds with the strong order backlog.
It said the working capital situation was ameliorated by strong customer advances and otherwise remains weak.
It has cut BHEL's financial year 2026 and 2027 estimates by 19% and 3%, respectively.
CLSA said operationally, BHEL is turning but not as fast as its backlog, with its fourth quarter execution up 9% from the previous year and profit after tax (PAT) disappointing at a 4% increase from the last year. This is leading it to missing consensus earnings per share estimates (EPS) by 50%, the brokerage said.
BHEL's key bright spot was resurgence of fossil orders, given India's focus on energy security, even as its thermal business orders peaked at 26.6 giga watt (GW) in the financial year 2025, CLSA said.
The brokerage continues to see the stock as expensive at a 35x FY26CL price-to-earnings ratio.
Of the 17 analysts that have coverage on the stock, seven have a "buy" rating, two have a "hold" rating and eight have a "sell" rating.
BHEL shares declined 1% in trade on Monday, May 19. The stock was down 0.5% at ₹249.11 apiece at 11.20 am. It has gained 9.6% in the past month.
Also Read: Vodafone Idea shares fall 5% ahead of Supreme Court hearing on AGR reliefContinue ReadingCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsBHELbrokerageCLSAKotak Institutional Equitiesshare market today