CLSA on BHEL ; Underperform, TP raised to Rs 351

• Reiterate U-P as entry of Chinese suppliers, JSW Toshiba, L&T and Thermax into its core thermal equipment segment question its market dominance and its backlog looks to have peaked, while the stock is pricing in a lot more • Operationally, BHEL did well, with 2QFY27 top-line growth of 24% YoY driving its Ebitda margin up 330bps to 11.0%, which was a positive surprise. • Hence, raise our FY27-29CL PAT estimates by 10-11%. • BHEL is up 8% over past month, likely in anticipation of a strong 2Q despite lack of orders. • Hence, believe strong 2Q is priced in, while it is expensive at a 39x FY28CL PE on a structural peak in its power orders.

BHEL

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