BHEL Secures Major Thermal Orders with a Positive Market Outlook

BHEL Secures Major Thermal Orders with a Positive Market Outlook

BHEL Secures Major Thermal Orders with a Positive Market Outlook

Bharat Heavy Electricals Ltd (BHEL) has witnessed a significant upsurge in its thermal orders, securing 3GW in the first half of FY24, according to a report from Nuvama Institutional Equities. With an additional 7.4GW of thermal orders currently in the tendering process, BHEL is projected to achieve 6-7GW of thermal Order Inflow (OI) and capture a 50% market share by the end of FY24.

India’s Power Ministry has raised its thermal capital expenditure target to 50–55 GW, up from the previous 30 GW. This increase is in response to the growing power demand and the limitations of renewable energy sources in meeting the continuous supply needs of the country.

BHEL’s Stock and Market Potential

Nuvama Institutional Equities has raised BHEL’s target price by 50%, from ₹150 to ₹225, anticipating more than a 30% upside from its current levels. This bullish outlook is based on macro tailwinds, an increase in BHEL’s OI to about 4.5GW/year, and an expected rise in revenues and EBITDA margins. In July 2023, the brokerage upgraded BHEL to a Braveheart ‘BUY’ status, considering the power balance moving towards a deficit scenario.

Projection of Thermal Ordering and BHEL’s Market Share

The brokerage forecasts an annual thermal ordering of 8–12 GW over FY24–30E, due to the Ministry of Power’s recent revisions in thermal capital expenditure targets. For BHEL, this translates to a 50% market share and approximately 4.5 GW of annual thermal output in a duopolistic market. This projection exceeds BHEL’s usual OI of ₹140–180 billion observed during the downturn in the last four–five years.

BHEL is valued at 22x Mar-26E EPS, implying a 30%-plus upside potential at a revised target price of ₹225. In a bull case scenario, with a 70% market share and 12% margins, the target price could reach ₹272.

BHEL’s Stock Performance and Broader Market Trends

On a day of overall positive market trends, BHEL’s share price reached a 52-week high, opening at ₹175 and touching an intraday high of ₹176.50 on the BSE. Concurrently, the Nifty 50 and the Sensex recorded new highs, alongside the BSE Midcap and Smallcap indices. The domestic market experienced significant gains following the state election results, enhancing confidence in the country’s political stability.

Disclaimer: The opinions and suggestions provided in this article are those of individual analysts and do not reflect the viewpoints of VoM News. We encourage investors to consult with certified experts before making any investment choices.

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