BHEL's highest price target sees stock at ₹450 but bears see 42% downside

Shares of state-run Bharat Heavy Electricals Ltd. (BHEL) now have more "buy" recommendations compared to "sell" in at least five years. However, with the stock having rallied 55% in the last one month, even the most bullish price target caps the upside potential, while increasing the potential downside scope for bearish recommendations.

BHEL shares ended over 7% higher on Monday after its fourth quarter results. The stock cooled off from the highs of the day, during which it had surged as much as 12%.

During the March quarter, BHEL's operating performance was strong with an expansion in margins as well as EBITDA on a year-on-year basis.

Brokerage firm Morgan Stanley maintained its "overweight" rating on the stock and raised its price target to ₹444 from ₹304 earlier. This is the third-highest price target for BHEL on the street after ICICI Securities and Nuvama (₹450 each). The highest price target implies an upside potential of 25% from current levels.

Morgan Stanley said that the fourth quarter had a lot of positive surprises and that BHEL's turnaround could continue to surprise the markets. Improved revenue execution, consistent power segment margins which increase market confidence and improvement in receivables position are some key catalysts for the stock.

On the flip side, CLSA has an "underperform" rating on the stock with a price target of ₹282.

The brokerage said that BHEL has rallied on the energy security theme but it does not see any new orders for the company within this segment.

At 51.2 times its financial year 2027 estimated price-to-earnings, BHEL is an expensive stock for CLSA as its order inflow peaked in financial year 2025.

CLSA also said that BHEL's quality of growth was not good as gross margins were down 150 basis points and expansion was led by lower non-cash provisions and forex gains.

JPMorgan is also bearish on BHEL with an "underweight" rating and a price target of ₹220, stating that the sharp outperformance provides a good exit opportunity in a deeply cyclical name, particularly since the best of the thermal power plant ordering cycle is already behind.

While BHEL's financial year 2026 order inflows fell 19% from last year and power segment orders fell 27%, the brokerage sees a further 12% drop in order inflow during the new year.

The brokerage went on to say that the current stock price more than adequately captures in the long-term profit mandate.

10 out of the 21 analysts covering BHEL now have a "buy" rating on the stock, two say "hold", while nine others have a "sell" rating.

Shares of BHEL ended 7% higher on Monday at ₹377.05.