BHEL Reports 24% Revenue Growth in Q2 as EBITDA Surges 77% YoY

Market snapshot: Bharat Heavy Electricals Limited delivered strong quarterly operating results, with revenue expanding 24% YoY and EBITDA surging 77% YoY. Operating performance was bolstered by gross margin expansion of 600 bps to 36.5%, though quarterly order inflows moderated sharply to ₹4,000 crore due to a temporary absence of large thermal power orders.

Data Snapshot

• Q2 revenue increased by 24% YoY, exceeding consensus estimates.
• EBITDA grew 77% YoY, driven by gross margin expansion of 600 bps to 36.5%.
• EBITDA margin expanded by 330 bps YoY to reach 11%.
• Power segment revenue grew 17% YoY, while Industry segment revenue expanded 45% YoY.
• Q2 order inflows declined 82% YoY to ₹4,000 crore.

What's Changed

• Gross margin increased by 600 bps YoY to 36.5%, leading to higher operating profitability.
• EBITDA margin expanded by 330 bps YoY to 11%.
• Industry segment revenue growth accelerated to 45% YoY, outpacing Power segment growth of 17% YoY.

Key Takeaways

• BHEL demonstrated robust operational execution, converting order backlog into revenue growth across both Power and Industry business segments.
• Cost discipline and high-value project execution yielded significant gross margin expansion.
• Order intake experienced a sharp quarterly contraction of 82% YoY due to lumpiness in thermal power tendering.

SAHI Perspective

BHEL's financial performance highlights a clear distinction between operational execution and order intake volatility. Strong growth in revenue and EBITDA demonstrates that execution of the existing order book is progressing efficiently. However, the drop in quarterly order inflows emphasizes the dependency on large state and central thermal power tenders for sustained long-term order replenishment.

Market Implications

The capital goods and power equipment sector continues to benefit from national power capacity addition targets. Execution tailwinds support revenue visibility in the near term, but sustained valuation multiples will depend on the timing of upcoming thermal and industrial project awards.

Trading Signals

Market Bias: Neutral

Robust operational revenue growth of 24% YoY and EBITDA margin expansion to 11% provide strong fundamental backing, counterbalanced by an 82% YoY fall in Q2 order inflows to ₹4,000 crore.

Overweight: Capital Goods - Power Equipment, Industrial Engineering

Trigger Factors:

• Execution pace on existing order backlog
• Fresh thermal power project tender notifications
• Working capital efficiency and cash collection milestones

Time Horizon: Medium-term (3-12 months)

Industry Context

India's power sector is witnessing renewed capital expenditure across thermal and clean energy transition initiatives to meet peak power demands. Heavy equipment manufacturers rely on large-capacity orders from PSUs and private power producers, making quarterly order intake naturally lumpy.

Key Risks to Watch

• Slower-than-anticipated ordering activity in large supercritical thermal projects
• Potential execution delays or supply chain bottlenecks in complex power projects
• Working capital pressure if milestone receivables encounter payment delays

Recent Developments

Earlier in June 2026, BHEL received a notification of award worth over ₹21,000 crore from Meja Urja Nigam for a 3x800 MW supercritical thermal power project EPC package, significantly adding to its order backlog.

Closing Insight

BHEL's operating results prove that execution capabilities remain solid. Long-term performance will hinges on turning strong tender pipelines into official order awards to replenish the order backlog.

High Performance Trading with SAHI.