BHEL shares: 35% upside coming for this multibagger PSU or an 9% correction more likely?

BHEL share price: Domestic brokerage firms are divided on Bharat Heavy Electrical (BHEL) with some suggesting a strong upside in the stock citing improving fundamentals, while other see some downside in the stock even as gradual improvement in the execution amid new orders in sight.

Analysts tracking the stock said that BHEL has built a strong order pipeline over the past three years, with FY24/25 order inflows rising sharply. FY26 order inflows supported by announced orders and L1 positions. While execution has lagged due to teething issues in new facilities, a sharp ramp-up is expected from FY27 as major thermal and industrial orders move into the execution phase, they note.

According to the analysts, capacity expansion, debottlenecking, better advances and improved receivables should aid margins and working capital. Long-term growth is supported by a strong thermal pipeline and diversification, though execution pace and balance sheet strength remain key monitorables.

Shares of BHEL jumped more than 1.5 per cent to Rs 279 on Thursday, with its market capitalization hovering around Rs 1 lakh crore. The stock had settled at Rs 274.85 on Wednesday. Shares of BHEL have slumped nearly 7 per cent from its 52-week high at Rs 295.20 hit on November 27, 2025.

Shares of BHEL have jumped nearly 20 per cent in 2025 so far, while the stock up 10 per cent in the last six months. It has rallied nearly 22 per cent in the last three months. The state-run capital good major has soared 675 per cent in last five years, while it has zoomed more than 1,200 per cent from its covid-19 lows.

BHEL has accumulated a strong orderbook in last three years but execution has been slow. Order inflow in FY24/25 was Rs 78,000 crore/ Rs 92,000 crore, respectively, said ICICI Securities. "We expect FY26E them to be Rs 90,000 crore as it has announced inflows of Rs 35,300 crore so far and is L1 in Rs 40,000. We believe execution ramp up was due to teething issues for new built ups."

The issues are ironing out and we expect sharp execution ramp up in FY27E. The new built-up pipeline (yet to be awarded) remains strong at 20GW Moreover, India may need coal and nuclear plants considering retirement of coal-based plants to meet the base load demand, it added, believing improving fundamentals and reiterating 'buy' with a revised target price of Rs 370.

On the other hand, PL Capital, discussed its execution trajectory, tendering pipeline, and overall business outlook with the management. BHEL expects to sustain strong order intake momentum, supported by a robust pipeline across thermal, HVDC, railways and renewable energy segments.

It anticipates delivering 9GW in FY26, broadly flat YoY, and expects the sizable orders secured over the past 2 years with a state regulatory approval window of 1.5–2 years, to transition to execution from FY27, indicating medium-term execution ramp-up. It is undertaking capacity enhancement and debottlenecking initiatives, including increasing thermal manufacturing capacity from 10GW to 12GW per annum and scaling up electrical equipment capabilities, said PL Capital.

"We believe these initiatives, combined with higher execution, should provide operating leverage and support margin expansion. Moreover, improving receivable quality, better advances from NTPC, and systematic closure of legacy projects are expected to improve BHEL’s working capital position. We maintain our 'hold' rating with an unchanged target price of Rs 250," it adds.

Among other brokerage firms, Antique Stock Broking has a 'buy' rating on BHEL with a target price of Rs 349. Similarly, overseas brokerage Morgan Stanley has an 'overweight' stance on the stock.