Bharat Heavy Electricals Ltd. (BHEL) shares surged 5.5% on Thursday, May 7, extending their remarkable rally to a record high. According to reports from CNBC TV18, the stock has gained in four out of the last five trading sessions and 18 out of 21 trading sessions over the past month. The stock is currently trading at ₹406.35, representing a 40% gain for the year and a more than 10x increase from ₹35.9 in 2020. This dramatic appreciation has delivered positive returns in each of the last six years, making it one of the standout performers in the PSU sector.
BHEL's recent financial performance has significantly exceeded market expectations, with margins in the fourth quarter beating analyst forecasts. As reported by CNBC TV18, profitability during the quarter was aided by higher other income, while margins for the full financial year 2026 reached the highest level since financial year 2021. The growth momentum was primarily driven by the power sector, whose revenue grew by 53% from the year-ago period, while the industrial segment remained flat. The power segment EBIT margin increased dramatically from 5% last year to 20%, while the industrial segment margin narrowed to 24% from 31% earlier.
Despite the strong performance, analyst sentiment remains divided on BHEL's prospects. According to CNBC TV18, Morgan Stanley maintains an outperform rating with a price target of ₹444, stating that BHEL's turnaround could continue to surprise the markets. However, CLSA and JPMorgan are bearish on the stock, with CLSA noting that the quality of BHEL's growth in the fourth quarter was not good as gross margins fell. CLSA has an underperform rating with a price target at ₹282, while JPMorgan has an underperform rating with a price target of ₹220, suggesting the sharp outperformance provides a good exit opportunity in a deeply cyclical name.
The stock currently has 21 analysts tracking it, of which nine have a buy rating, 10 have a sell rating, and two others have a hold recommendation. As reported by CNBC TV18, brokerages are split on whether the current stock price adequately factors in the long-term profit potential, with some viewing the recent rally as driven by energy security themes without clear visibility on new orders. The consensus reflects the cyclical nature of the PSU sector and the challenges in valuing companies with significant earnings volatility.
