Shares of Bharat Heavy Electricals Ltd (BHEL) came under pressure after CLSA reiterated its ‘Underperform’ rating on the stock and set a target price of ₹198, citing disappointing first-quarter performance and stretched valuations.
According to the brokerage, net loss for Q1FY26 surged 114% year-on-year, missing street estimates sharply. While execution was expected to improve following two years of robust backlog growth, revenue execution rose just 4% YoY, falling well short of expectations.
CLSA acknowledged a positive trend in thermal power orders, stating that India’s focus on energy security has contributed to a resurgence in fossil fuel-based orders. The company’s thermal business peaked at 26.6GW in FY25, offering a potential medium-term tailwind.
However, at 45x FY26CL P/E, CLSA believes the current valuation offers little justification given the weak earnings print and slow execution momentum. The brokerage maintained its cautious stance, suggesting upside may remain limited unless operational delivery improves meaningfully.
Disclaimer: The views and investment suggestions expressed by brokerages are their own and not those of this publication. Investors are advised to consult certified financial experts before making any investment decisions.
