The share price of Bharat Heavy Electricals (BHEL) ended Monday’s session in the red, falling 2.3% to close at Rs 244.45. But what is sparking conversation on Dalal Street is not the dip alone but the divergence in the outlook of various brokerages.
While some remain bullish on the PSU engineering giant, one brokerage has taken a strong contrarian stance. Kotak Institutional Equities has slapped a ‘sell’ tag on BHEL and sees a drastic 55% downside from current levels, predicting the stock may fall to Rs 115.
Let’s take a look at what the brokerages are saying and why they are so divided.
Kotak calls a caution on BHEL: ‘Sell’ with Rs 115 target
The brokerage firm Kotak Institutional Equities has raised eyebrows with its ultra-bearish view. As per the brokerage report, BHEL’s recent Q4 earnings missed expectations, especially after adjusting for certain provisions and a strong industrial print, which may not be sustainable.
It pointed to a miss in EBITDA (Earnings before tax, interest, depreciation and amortization) estimates, even after accounting for one-time reversals and temporary gains in the industrial segment, which may not be sustainable in the long run. The bigger worry, however, lies in the sluggish execution in BHEL’s core power business, an area where the company holds a dominant position.
The brokerage also flagged concerns around BHEL’s working capital, saying that while it looked manageable, the underlying situation remains weak.
CLSA on BHEL: Softer view, but still not fully bullish
Global brokerage CLSA also sounded cautious, albeit less than Kotak. It maintained a ‘reduce’ rating, but increased its price target from Rs 166 to Rs 198.
Nuvama on BHEL: Optimistic despite short-term hiccups
Contrasting sharply with Kotak outlook, the brokerage firm Nuvama Institutional Equities is still backing the stock, retaining its ‘buy’ call. Although it revised its FY26 earnings estimate down by 43%, it sees long-term potential driven by BHEL’s dominance in India’s thermal power revival.
“We reckon Rs 14.1 EPS by FY27E (versus Rs 1.5 as of end-FY25),” the brokerage said in its note, projecting a target price of Rs 360 based on FY27 earnings.
According to the brokerage, BHEL’s revenue grew nearly 9% YoY in Q4FY25 to Rs 89.9 billion, while operating margins (OPM) improved to 9.2%. Notably, the industrial segment surged 34% in revenue and achieved a remarkable EBIT margin of 31.3%.
JM Financial on BHEL: Bets on thermal boom
Another brokerage firm JM Financial is also in the bullish camp, sticking with its ‘buy’ rating and a target price of Rs 281. It sees BHEL as a direct beneficiary of India’s thermal capacity expansion push, which recently increased from 80 GW to 100 GW by FY32.
“Execution of legacy projects is nearing completion, and the industry order mix is improving,” noted the brokerage firm, adding that EBITDA margins could climb from 4.4% in FY25 to at least 11% by FY28.
The brokerage expects execution to ramp up sharply from FY26 onwards, driven by BHEL’s growing and executable order book, especially as older projects like NTPC’s Patratu and Talcher near closure.