Bharat Heavy Electricals Limited (BHEL) announced its Q1 FY26 earnings on 6 August 2025, reporting a widening loss despite stable revenues. The company posted a consolidated net loss of ₹455.5 crore on revenues of ₹5,486.91 crore, representing a YoY loss increase of over 115%.
Margins came under severe pressure, mainly due to cost escalations in older fixed-price contracts in the power segment, along with execution delays that restricted billing. While revenues were broadly in line with the previous year, profitability erosion was stark.
Consolidated and Standalone Performance
Consolidated Figures
-
Revenue from Operations: ₹5,486.91 crore (vs ₹5,434.92 crore in Q1 FY25)
-
Profit Before Tax (PBT): ₹-365.96 crore (vs ₹-72.49 crore)
-
Profit After Tax (PAT): ₹-455.50 crore (vs ₹-211.40 crore)
Standalone Figures
-
Revenue from Operations: ₹5,486.91 crore (vs ₹5,484.92 crore)
-
PBT: ₹-351.70 crore (vs ₹-59.40 crore)
-
PAT: ₹-454.89 crore (vs ₹-212.52 crore)
Both sets of figures show revenue stagnation at around ₹5,487 crore but a substantial widening in quarterly losses.
Year-on-Year (YoY) Performance Analysis
Consolidated revenues were marginally higher by 0.95% YoY, but PAT declined 115.47% YoY. Standalone performance followed a similar pattern with revenue decline of 0.04% and PAT decline of 114.05%.
The revenue flatness indicates project execution levels have been steady but not expanding. The margin compression, however, is attributed to:
-
Legacy thermal power projects with thin margins.
-
Higher input costs in steel, cement, and logistics.
-
Delay in milestone approvals and customer payments.
Segment-Wise Performance
Power Segment
The core power division reported a pre-tax loss exceeding ₹500 crore, hit by delayed execution and liquidated damages on old projects. Thermal capacity expansion orders remain the bulk of the segment’s pipeline, but older contracts signed at lower prices continue to weigh on profitability.
Industrial and Export Segment
The industrial and export business delivered a pre-tax profit of around ₹307 crore. Exports benefited from stronger pricing and diversified demand, while industrial orders in renewables and transportation helped offset some of the losses in power.
Receivables and Provisions
BHEL’s receivables position remains a focus point for analysts. Two major outstanding amounts include:
-
₹211 crore from Sudan (STPG)
-
₹185 crore from Rajasthan Rajya Vidyut Utpadan Nigam Limited (RVUNL)
The company has so far received partial payments of ₹90 crore, with another ₹50 crore received in July 2025. Contract extensions have been secured for these projects, which reduces the immediate provisioning requirement. However, if full provisioning had been done in Q1, the loss figure would have been significantly higher.
Order Book Strength
As of Q1 FY26, BHEL’s order book stands at approximately ₹2.04 trillion — equivalent to 7.2 times its trailing twelve-month revenue.
Key order inflows in Q1:
-
Total new orders: ₹13,445 crore.
-
Power segment: 79% of new inflows.
-
Industrial and export: 21% of new inflows.
The revival of the thermal power cycle has been instrumental, with major wins such as:
-
₹6,500 crore order from Adani Power.
-
L1 position for nearly 5 GW of new coal-based capacity.
Full-year inflows are expected between ₹70,000 crore and ₹80,000 crore, indicating a healthy pipeline.
Share Price Performance
On 6 August 2025, BHEL shares opened at ₹231.78 but slipped to ₹225.50 as the market digested the results.
Performance snapshot:
-
1-Year return: –25.94%
-
5-Year return: +539.86%
-
Since listing: +1,174.29%
While the long-term chart shows strong compounding, the past year’s performance highlights volatility and the need for patience from long-term investors.
Technical Analysis
-
Resistance: ₹256
-
Support: ₹214 and ₹189
-
RSI: Neutral-to-weak territory, indicating sideways to mild bearish sentiment.
Short-term traders may prefer range-bound strategies until the stock closes decisively above ₹256 with strong volumes. Long-term investors could look at accumulation in the ₹210–₹220 range.
Peer Comparison
BHEL’s primary peers include Larsen & Toubro (power EPC segment), NTPC (EPC division), and other PSU heavy engineering firms.
While BHEL’s order book multiple is one of the highest in the sector, margins remain weaker than peers due to its heavier exposure to legacy contracts. L&T, for example, has maintained double-digit operating margins by focusing on diversified EPC orders, while BHEL’s margins have been in low single digits or negative in recent quarters.
Strategic Developments
-
Thermal Power Revival: Recent order wins in coal-based plants indicate the government’s push for baseload capacity, which plays to BHEL’s manufacturing strength.
-
Renewable & Transmission Expansion: BHEL is actively pursuing opportunities in solar, hydro, and grid modernisation.
-
Export Market Push: Targeting African and Southeast Asian markets for turnkey projects and equipment supply.
-
Technology Partnerships: Exploring collaborations for supercritical and ultra-supercritical technology upgrades.
Key Risks
-
Execution Delays: Further slippage in project timelines can lead to penalties and margin erosion.
-
Cost Escalations: Continued volatility in commodity prices without pass-through clauses.
-
Receivables Risk: Large outstanding amounts from stressed clients.
-
Policy Dependence: Heavy reliance on government-backed projects and budget allocations.
Analyst Outlook
Brokerages remain cautiously optimistic:
-
Consensus target price: ₹320–₹335.
-
FY26 profit forecasts have been cut by ~25% post-Q1 results.
-
FY27 forecasts remain intact on expectations of margin recovery.
The recovery thesis rests on completion of low-margin projects in FY26 and improved execution of newly secured, better-priced orders.
Investment Perspective
For long-term investors, BHEL offers:
-
A debt-free balance sheet.
-
Massive order book visibility.
-
Strong PSU backing and sectoral positioning.
For short-term traders, the stock’s range-bound technical setup requires tactical entries around support levels with strict stop-losses.
Conclusion
BHEL’s Q1 FY26 numbers reflect the structural challenges of the EPC and heavy engineering sector—stable revenue does not guarantee stable profits when legacy contracts and input costs collide. However, the company’s ₹2 trillion+ order book, debt-free status, and recent wins in thermal and industrial segments suggest potential for a turnaround over the medium term.
The next two quarters will be decisive in determining whether execution speeds up, margins improve, and the market regains confidence. Until then, the stock may remain range-bound, offering opportunities only for disciplined traders and patient, research-driven investors.
