Bharat Heavy Electricals - Holding All The Aces: ICICI Securities

ICICI Securities Report

We maintain Buy on Bharat Heavy Electricals Ltd. with an unchanged target price of Rs 370, valuing the stock at 40 times FY26E earnings per share of Rs 9.1/share.

Thermal equipment ordering is scaling the summit. In our view, it would be overly hasty to write an obituary for thermal or coal-based power yet. We posit, the need to add reliability to the grid has led policymakers to push the pedal on the addition of new thermal power plants.

As a result, developers are swiftly finalising and awarding equipment orders. In parallel, the largest coal-based player (NTPC) is on the ready to add another 26 GW of new coal-based power; the largest private player has already placed an order for 11GW of coal-based equipment.

In entirety, this is fuelling order inflow for BHEL. Note – BHEL has already announced order inflow of Rs 364 billion and is level- in another 3.2GW (estimated at Rs 200 billion). As a result, we estimate order inflow of Rs 1 trillion in FY25 for BHEL.

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