Bharat Heavy Electricals shares gained momentum on Friday, January 9, after the company announced securing a substantial order worth ₹5,400.00 crores from its joint venture with Coal India Ltd. in Odisha. The order represents a significant milestone as it marks the first commercial deployment of BHEL's proprietary technology.

Major Contract Details

The comprehensive order encompasses the coal gasification and raw syngas cleaning plant (LSTK 1 Package) for Bharat Coal Gasification and Chemicals Ltd.'s (BCGCL) coal to 2,000 TPD ammonium nitrate project in Odisha. The contract scope includes multiple components:

The contract covers design, engineering, supply of equipment, civil works, setting up, commissioning and operations and maintenance (O&M) services for the LSTK 1 Package. The preliminary acceptance, commissioning and performance guarantee test is scheduled for completion within 42 months, while O&M services will extend for 60 months from the preliminary acceptance.

Technology Milestone and Market Impact

This order represents a crucial transition for BHEL as it marks the first commercial use of the company's proprietary PFBG technology, moving from the research and development stage to the execution phase. The development comes as a positive catalyst following recent market volatility.

BHEL shares had declined over 10% on Thursday after a Reuters report indicated that the Indian government is considering lifting restrictions on Chinese companies in bidding for government contracts. This news also impacted other capital goods companies, with ABB India, Siemens India, and L&T falling between 4% to 6%.

Analyst Outlook and Stock Performance

Despite recent market concerns, brokerage firm UBS maintained its buy rating on BHEL with a price target of ₹375.00, implying a potential upside of 36% from current levels. UBS noted that this transaction provides a positive read-through for the stock after the recent correction.

BHEL shares were trading 1.5% higher at ₹275.95 apiece just after market open on Friday. The stock has demonstrated strong performance over the past year, gaining 27.5% during this period, reflecting investor confidence in the company's execution capabilities and order book strength.

Bharat Heavy Electricals Ltd (BHEL) shares are set to be in focus following UBS's 'Buy' rating with a target price of ₹375 per share, despite a sharp selloff triggered by policy-related concerns. The brokerage's target implies over 35% upside from Thursday's closing level of ₹276.90, with the positive stance backed by strong recent order wins and improving execution visibility.

Major Order Win Drives Optimism

BHEL has secured a significant ₹5,400-crore coal gasification and raw syngas cleaning plant order, substantially boosting its FY26 order inflows to around 60% of full-year expectations. The order details are outlined below:

This order marks the first commercial deployment of BHEL's proprietary Pressurised Fluidised Bed Gasification (PFBG) technology, representing a significant shift from research and development to large-scale execution. UBS noted that the 42-month execution period combined with the 60-month operations and maintenance tenure strengthens the company's long-term revenue visibility.

Stock Performance Amid Policy Concerns

BHEL shares experienced significant volatility on Thursday, crashing nearly 9% and hitting a 10% lower circuit intraday. The selloff was triggered by a Reuters report indicating India is considering scrapping five-year-old restrictions on Chinese companies participating in government tenders.

Despite the recent correction, BHEL remains up about 28% over the past year, significantly outperforming the Nifty 50's roughly 10% rise during the same period.

Broader Market Impact

The policy concerns triggered a broad selloff across capital-goods stocks on Thursday, with peers including Siemens, ABB India, and L&T also experiencing declines. Investor concerns center around potential intensified competition in large government contracts, particularly in power and railways sectors, if restrictions on Chinese bidders are eased.

UBS's Strategic Outlook

Looking beyond near-term policy uncertainty, UBS emphasized that BHEL's improving order book, technology differentiation, and execution pipeline position the company favorably after the recent decline. The brokerage highlighted the robust order momentum as a key positive factor, with the recent correction presenting an attractive entry opportunity for investors.

The ₹5,400-crore order win demonstrates BHEL's capability to secure large-scale projects and successfully commercialize its proprietary technologies, providing a foundation for sustained growth despite short-term market volatility.