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.

Bharat Heavy Electricals Limited (BHEL) has secured a major order worth approximately ₹5,400 crore from Bharat Coal Gasification and Chemicals Limited (BCGCL), positioning the company for significant business growth. The order represents a substantial addition to BHEL's order book and demonstrates the company's capabilities in large-scale industrial projects.

Major Order Win Details

The order pertains to the Coal Gasification and Raw Syngas Cleaning Plant (LSTK 1 Package) of BCGCL's Coal to 2000 TPD Ammonium Nitrate Project located in Lakhanpur, Jharsuguda district, Odisha. BCGCL is a joint venture between Coal India Limited (51%) and BHEL (49%), making this a related party transaction conducted at arm's length.

Project Scope and Timeline

As per the terms of the Letter of Acceptance (LOA), the comprehensive contract includes multiple components and services. The project encompasses design, engineering, supply of equipment, civil works, erection, commissioning, and operation & maintenance (O&M) services.

Strategic Entry into Railway Propulsion

Separately, BHEL announced it has commenced supply of semi-high-speed underslung traction converters for the Vande Bharat Sleeper Train project. This development marks the company's strategic entry into the semi-high-speed propulsion segment, expanding its portfolio in the railway sector.

The first set of traction converters, specifically designed for the Vande Bharat Sleeper variant, were flagged off at BHEL's Bengaluru plant and are being sent to Kolkata for final assembly. The advanced IGBT-based converters form part of a sophisticated propulsion system with impressive speed capabilities.

Manufacturing and Production Network

The underslung architecture represents a significant technological advancement, freeing up passenger space onboard by positioning propulsion equipment beneath the train car, thereby improving payload efficiency. This design innovation demonstrates BHEL's engineering capabilities in modern railway technology.

Other components for the Vande Bharat Sleeper project are being manufactured across BHEL's production network. Traction motors and transformers are being produced at the company's Bhopal and Jhansi units, showcasing the integrated manufacturing approach across multiple facilities.

These developments highlight BHEL's diversified capabilities across heavy industrial projects and advanced railway technology, positioning the company as a key player in India's infrastructure development initiatives.