BHEL shares hit all-time high post strong Q1 show; will profitability concerns weigh on outlook?

Defence PSU major, Bharat Heavy Electricals Ltd (BHEL) shares surged to their all-time high during the trading session on Friday, July 17, as investors focused on the company turning around to post profits in Q1 earnings for the fiscal year ending 2026-27, against a net loss a year ago.

Shares of BHEL gained 2.5% to their intraday and 52-week high level of ₹446.50 on Friday’s market, compared to ₹435.40 at the previous stock market close, according to NSE data. The PSU defence equipment maker announced its Q1 earnings

BHEL’s healthy Q1 performance was supported by the increase in segmental revenue from the company’s power and industry businesses, which fuelled the overall revenue from core operations in the period under review.

With a strong order book and continued opportunity momentum, the company now aims to focus on execution strategies in an effort to improve the company’s overall margins in the upcoming period.

Despite the healthy Q1 show, market experts predict that the company may face difficulties ahead to improve its profitability, unless the firm can execute the order backlog at a sustained pace.

How did BHEL perform in Q1 earnings?

On July 16, BHEL recorded a consolidated net profit (attributable to the owners of the company) of ₹376.71 crore in the April to June quarter of FY27, against a net loss of ₹455.50 crore in the same quarter of the previous fiscal year.

However, on a sequential basis, the profits declined 70% from ₹1,290 crore at the end of the March quarter of FY2026-27.

The NSE filings also showed that the company’s revenue from core operations surged more than 40% to ₹7,698 crore in the first quarter, from ₹5,487 crore in the same period a year earlier, backed by the improved performance of the power and industry businesses.

Like the profits, the revenues declined 37% on a sequential basis when compared with ₹12,310 crore in the fourth quarter of the year ended 2025-26.

BHEL’s ‘power’ segment revenues advanced 52% YoY to ₹5,919.50 crore, from ₹3,898.86 crore a year earlier. While the revenues from the company’s ‘industry’ business gained 12% to ₹1,778 crore, compared with ₹1,588 crore in the same period a year ago.

Profitability concerns ahead?

Analysts from Sydney-based leading investment firm Macquarie Group cautioned investors that with the strong order book growth and a rising order book backlog, unless BHEL executes them at a steady pace, the company can potentially face profitability concerns ahead.

“Unless sustained pick-up in execution is seen, BHEL could face difficulty improving profitability. Thereafter, high receivables remains another challenge,” said the Macquarie analysts in a note.

With improving gross margins on a year-on-year basis, robust topline growth, and continued flow of major orders, the company has shown strong execution in the June quarter, as focus now remains on how the firm will carry out the same in the remaining financial year.

Data shared by UBS analysts suggested that BHEL’s Q1 performance surpassed both revenue and EBITDA (earnings before interest, tax, depreciation and amortisation) estimates of the investment firm.

“Revenue was ahead by 20% while EBITDA beat was 51% vs UBS estimates. EBITDA margin expanded to 6.5%, ahead of the estimate of 5.2%, the most noteworthy areas in results,” said the experts.

In a contrasting view, leading US-based investment major JP Morgan analysts predict that BHEL’s total order inflows are expected to further decline on a year-on-year basis by around 12% in the financial year ending 2026-27, as per the estimates.

With the thermal power plant ordering cycle behind investors, the analyst firm’s conservative views come after BHEL’s order inflows dropped 19% YoY, with power segment orders falling 27% YoY in the financial year ended FY2025-26.

What’s next in store for BHEL?

Looking ahead, BHEL’s management in its investors' presentation highlighted that the company expects nuclear, coal gasification, and green hydrogen to become the next engines of growth.

The company is diversifying into HVDC and green energy corridors, defence, and rail mobility to reduce its dependence on any single sector.

BHEL also said that the company expects India’s infrastructure and energy expansion support to create large and durable demand opportunities for the company in the upcoming period.

How have BHEL shares performed?

BHEL shares have delivered more than 562% returns to investors in the last five years, over 372% gains in the last three years, and more than 73% returns on their investment in the past one year period, according to NSE data.

On a year-to-date basis, BHEL stock has rallied 50% on the stock exchange and has gained 12% in the last one-month period. The company shares were trading 11% higher in the last five market sessions.

While the stock surged to its 52-week high on Friday’s market, its 52-week low was at ₹205.12 on August 29, 2025, according to the exchange data. BHEL’s market capitalisation (m-cap) was at over ₹1.51 lakh crore as of the trading session on July 17, 2026.