1:5 Split, 2 Bonus, 37 Dividends All-Time: Maharatna PSU Stock BHEL May Rise By 19% Ahead; New Target Price?

Bharat Heavy Electricals Ltd, a leading Maharatna PSU, dropped by nearly 3% and erased its Rs 260 mark on November 6. The PSU giant has hovered closer to its 52-week high of Rs 272 apiece over the past few days. The latest correction comes as a buy-on-dips opportunity as brokerages have recommended BUY. There is potential of more than 19% upside ahead, with ICICI Direct setting Rs 310 target price. If BHEL crosses Rs 300 mark, then it will be at new all-time highs. BHEL holds a healthy bonus and splits record, while the stock is among top dividend rewarders.

Bharat Heavy Electricals Ltd Share Price:

After market hours of November 6, BHEL share price closed at Rs 259.95 apiece on BSE, down by 3% with market cap of Rs 90,516.24 crore. The stock's 52-week high and low is at Rs 272 apiece and Rs 176 apiece respectively.

YTD, the stock is marginally down.

BUY BHEL Stock Price?

In a note, ICICI Direct analysts said, "Good accretion of orders and strong ordering pipeline will keep order inflows strong coupled with strong pick in execution from FY26E onwards. This will also help margins and return ratios to improve meaningfully over the next 2-3 years. Hence, we rate the stock buy with fair value of Rs 310 (30x FY27E EPS)."

The analysts highlighted two key factors for investment. These are:

1. Strong order inflows:

The PSU has received orders for 21.52 GW of thermal power orders in the Power segment over FY24-Q2FY26 and further bid pipeline for thermal projects is estimated at ~30 GW. This translates to order bid pipeline of roughly Rs 2.4 trillion, BHEL being industry leader stands to secure significant portion of these orders.

Going ahead, analysts said, "we expect order inflow momentum to continue, pickup in execution pace, thus we have built in order inflows of Rs 66833 crore & Rs 49200 crore in FY26E and FY27E respectively."

2. Execution to ramp up:

Also, execution in Q2 grew with Industry and power segment growing at 18% and 13 % respectively, with reasonable backlog (with ~8x order book to bill ratio) and strong order bid pipeline upto FY32.

Analysts at ICICI Direct are expecting execution ramp up in H2FY26E-FY27E with strong improvement in EBIDTA margins from 4.4% in FY25 to 9.9% in FY27E on back of execution scale up of profitable orders. Hence, they added, "we expect the revenues and PAT to grow at a CAGR of ~26% and 166% over FY25-FY27E with PAT. This will also improve ROCE from low single digit to ~12% ROCE in FY27E."

BHEL Corporate Actions:

Dividends: BHEL has delivered 37 dividends since September 2003, as per Trendlyne data. In the last 12 months, BHEL's dividend amounted to Rs 0.50 per share. Its current dividend yield is at 0.19%.

Bonus: BHEL has rewarded investors with two bonuses. The first bonus was of 1:1 ratio and was awarded in June 2017, followed by second bonus of 1:2 ratio in September 2017.

Stock Split: BHEL shares have split only once and in the ratio of 1:5. From October 2011, BHEL's face value is down from Rs 10 each to Rs 2 each due to the stock split ratio.

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