Quick Summary

  • BHEL reported a Q1 FY26 net loss of ₹455 crore—more than double last year’s.
  • Revenue remained almost flat at ₹5,487 crore.
  • Operating margin plunged to -9.8%, mainly due to rising expenses, poor execution, and increased provisions.
  • Company shares fell over 6% post-results, underperforming indices.
  • Order inflows jumped 42% YoY in Q1, supporting a strong ₹2.04 lakh crore order book.
  • CLSA maintained its ‘Underperform’ rating with a target of ₹198/share, citing sluggish execution despite a robust order book.

BHEL Q1 Financials Snapshot

Revenue
Net Loss

In-Depth Financial Analysis

Metric Q1 FY26 Q1 FY25 Change
Revenue ₹5,486.9cr ₹5,484.9cr +0.04%
Net Loss ₹454.9cr ₹212.5cr +114%
EBITDA Margin -9.8% -3.1% ↓
Order Inflows ₹13,400cr ₹9,400cr (est.) +42%
Order Book ₹2,044bn ~₹1,440bn +42%
Raw Material Cost ₹4,128cr ₹3,726cr +10.8%
Other Expenses ₹680cr ₹340cr +100%
Total Expenses ₹6,280cr ₹5,875cr +7%

Key Issues Behind Losses

  • Significant surge in operating and raw material costs (+10.8% YoY).
  • Notable one-off provisions pushed “other expenses” up 100% YoY.
  • Execution delays led to only 4% YoY growth in project delivery.
  • Adverse margin swings (EBITDA -9.8%) weighed heavily.

Operational Highlights

  • Commissioned the 700 MWe Unit 7 Rawatbhata Atomic Power Plant.
  • Commissioned North Karanpura and Punatsangchhu-II (Bhutan) hydro plants.
  • Bagged major orders, including 6 x 800MW Steam Turbine Generators and the 6,000MW HVDC project.
  • Signed strategic MoUs for technology and project development.

Market Reaction & Analyst Views

Timeframe Change
1 Day -6.1%
5 Days -5.6%
1 Month -12.1%
YTD -4%
52w High to Current -21%

CLSA: Underperform | Target ₹198

  • Highlights disappointing Q1 execution and valuation stretched at 45x earnings.
  • Sees upside capped unless operational turnaround is visible.
  • Warns on slow conversion of strong pipeline to profits.

Other Brokerages

  • Nuvama: Maintains ‘Buy’, cuts target to ₹335 (from ₹360).
  • JM Financial: ‘Buy’, target unchanged at ₹278—expects margin rebound by FY28.
  • Analyst consensus: 8 ‘Buy’, 8 ‘Sell’, 3 ‘Hold’; consensus target ~₹226.

Why Some Remain Optimistic

  • Near-monopoly in India’s thermal power sector (90%+ share).
  • ₹2 lakh+ crore order book gives revenue visibility.
  • Potential for margin improvement as new orders execute.
  • Beneficiary of government’s infrastructure and fossil revival push.

What’s Next: Outlook for Investors

  • Robust Order Pipeline: Order inflows are projected to remain strong, with up to 17GW in new projects expected in the next two years.
  • Long-term Story: BHEL is positioned to benefit from India’s thermal power revival and government’s infrastructure push.
  • Short-term Risks: Execution delays, rising input costs, and margin stress will likely weigh on earnings through FY26.
  • Technical Outlook: Immediate support: ₹190–199; resistance: ₹240. Weak momentum—wait for firm reversal before entry.
  • Cautious Trading: For now, traders should proceed cautiously due to ongoing volatility and negative near-term sentiment.
  • Strategic Moves: Watch for margin improvement and timely project execution as triggers for stock re-rating.

Key Takeaways for Investors

  • BHEL’s results highlight short-term pain but long-term promise.
  • Order book is at all-time highs, but translating this into profits remains challenging.
  • Investors with a long-term perspective and risk tolerance may consider accumulating on corrections.
  • Short-term traders should exercise caution until technical strength improves.

FAQs on BHEL’s Q1 FY26 Results

BHEL shares fell due to sharply widened net losses, negative EBITDA margin, rising operating costs, increased provisions, and execution delays. The overall market sentiment turned negative, leading to heavy selling.
BHEL reported a net loss of ₹454.89 crore in Q1 FY26, nearly twice the loss last year. Revenue was nearly flat at ₹5,486.91 crore.
Analyst targets for 2025 range from ₹198 (CLSA, Underperform) to ₹335 (Nuvama, Buy) with consensus around ₹226.
Many long-term analysts believe recovery is likely, due to a robust order book and improvements expected as new orders are executed. Short-term risks remain due to cost pressures and slow execution.
Long-term investors may consider holding or accumulating on dips given the strong order book and industry tailwinds. Short-term traders should adopt caution: technical indicators suggest risk of near-term downside unless key supports hold.
Key support zones lie at ₹190–₹199. Resistance is placed at ₹240. A decisive break below support could lead to more downside, while reclaiming ₹240 with strong volumes would be positive.