Morgan Stanley has reiterated its overweight rating on BHEL while raising the target price to ₹304 per share, as it remains optimistic on the company’s medium-term prospects despite a recent earnings miss.
The brokerage noted that BHEL’s Q3 performance fell short of expectations, largely due to weaker margins in the power segment. However, it believes this pressure is transitory, with execution expected to improve over the next few quarters as legacy, low-margin contracts near completion.
Morgan Stanley expects BHEL to continue commanding a dominant market share of around 70% in the domestic power equipment market, supported by its scale, execution capabilities and strategic importance in India’s energy ecosystem. The brokerage emphasised that coal-based power projects remain critical for energy security, which underpins its positive stance on the company.
In addition to thermal power, Morgan Stanley sees incremental order inflows from hydro, pumped storage and nuclear power projects, as well as potential traction in the industrial segment, including transportation, transmission and defence-related opportunities.
Despite near-term margin volatility, the brokerage believes BHEL is well positioned for a recovery in profitability as execution improves and order inflows remain strong.
Disclaimer: The views and recommendations above are those of Morgan Stanley. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
