Global investment bank Macquarie has upgraded Bharat Heavy Electricals Limited (BHEL) and set a target price of ₹205 per share, signaling positive analyst sentiment for the state-owned power equipment manufacturer.

Analyst Recommendation Details

The upgrade from Macquarie represents a positive shift in the brokerage's assessment of BHEL's prospects. The target price of ₹205 per share provides investors with a specific price objective based on the firm's analysis.

Company Background

BHEL operates as one of India's leading power equipment manufacturers, specializing in the design, engineering, manufacturing, and installation of power generation and transmission equipment. The company serves both domestic and international markets in the power sector.

Market Implications

The upgrade from Macquarie adds to the analyst coverage of BHEL, providing market participants with professional assessment of the company's investment potential. Target prices serve as benchmarks for investors evaluating their investment decisions in the power equipment sector.

Bharat Heavy Electricals (BHEL) faces continued bearish sentiment from major brokerage firm Investec, which maintains its aggressive downside target despite the company's recent quarterly results. The state-run power equipment manufacturer's stock closed at ₹263 on Monday following its third quarter earnings announcement, but analysts remain divided on its future prospects.

Investec Maintains Aggressive Bearish Stance

Investec, positioned as one of the biggest bears on BHEL, continues to project significant downside potential for the stock. The brokerage firm maintained its sell rating with a price target of ₹70, representing a substantial 73% downside from Monday's closing price.

The firm's bearish outlook stems from concerns about execution timeline challenges and supply chain impairment. According to Investec's analysis, weak ordering during financial year 2016-2023 forced several thermal power component vendors to exit or shut operations, creating significant supply chain disruptions.

Supply Chain and Execution Concerns

Investec highlighted that BHEL itself has closed in-house manufacturing of several components over the past decade, further complicating the execution landscape. The brokerage firm's checks indicate that meeting execution timelines could prove challenging given these supply chain constraints.

Kotak Institutional Equities shares similar concerns, maintaining a sell rating with a ₹120 price target, implying 55% downside potential. Kotak has reduced BHEL's Earnings Per Share estimates for financial year 2028 by 15% to account for slower execution pace, modest gross margin cuts, and marginal increases in employee costs related to pay commission adjustments.

Historical Performance Challenges

The company's historical performance presents additional concerns for analysts. JPMorgan's analysis reveals that BHEL's EBITDA margin averaged just 2.10% over financial year 2014-2025, with the minimum reaching -18.00% in financial year 2021. Despite winning majority orders in coal-based plants post-COVID-19, the long track record of unprofitable execution raises caution about execution pace.

Contrarian Bull Perspective

Contrary to the bearish sentiment, Nuvama maintains a buy rating with a ₹353 price target, indicating 34% upside potential. The brokerage anticipates a turnaround year in financial year 2027, expecting the company to be free of legacy drags and benefit from operating leverage.

Analyst Coverage and Market Performance

Among 19 analysts covering BHEL, opinions remain polarized with eight buy ratings, two hold recommendations, and nine sell ratings. The stock declined as much as 3% following the earnings announcement but recovered to close 1% lower at ₹263. Despite recent volatility, BHEL shares have gained 21% over the past year, reflecting mixed investor sentiment about the company's prospects.