Bharat Heavy Electricals Ltd. secured a major order in India’s thermal power sector with a 16% inflow in the NTPC tender this fiscal year. CLSA raised the company’s price target, but maintained a cautious “underperform” rating due to valuation concerns.
The order is a strong stepping stone for India’s renewed focus on fossil fuel-based power generation as the government pushes for energy security in response to rising demand. The brokerage increased the company’s price target to Rs 205 per share from Rs 189.
However, this recent increase in orders does not justify BHEL’s premium valuation, CLSA said.
According to the brokerage, the country aims to add thermal capacity from 52 GW to 80 GW by FY 2032, and the sector appears poised for growth, creating an opportunity for equipment makers like BHEL. is said to be born. The company’s order book is expected to contribute significantly to its revenue through fiscal 2027, driven by India’s power expansion goals.
However, CLSA believes that BHEL stock is overvalued, currently trading at a significant 40 times estimated fiscal year 2026 earnings per share. The brokerage highlighted that even after factoring in these new orders and expected profit growth, BHEL’s stock price is significantly higher than its peers.
