BHEL Q2 Results: Profit Soars 253% to ₹375 Crore, Revenue Up 14%

Introduction

Bharat Heavy Electricals Ltd. (BHEL) announced a significant financial turnaround for the second quarter of fiscal year 2025-26. The state-owned engineering major reported a massive surge in profitability, reversing a loss from the preceding quarter and posting strong year-on-year growth. The results, which reflect improved project execution and operational efficiency, were well-received by the market, triggering a positive response in the company's share price. This performance comes at a time when the company is also navigating broader market concerns and securing substantial new orders, painting a complex but largely positive picture for the capital goods giant.

A Closer Look at the Q2 Financials

For the quarter ending September 30, 2025, BHEL reported a consolidated net profit of ₹374.89 crore. This marks a remarkable 253.2% year-on-year increase from the ₹106.15 crore profit recorded in the same period of the previous fiscal year. The turnaround is even more pronounced when compared to the first quarter of FY26, where the company had posted a net loss of ₹455.50 crore. This sharp recovery underscores a significant improvement in the company's operational health and profitability management.

The company's top line also showed robust growth. Consolidated revenue from operations for Q2 FY26 rose by 14.1% year-on-year to ₹7,512 crore, up from ₹6,584 crore in the corresponding quarter last year. This growth was driven by stronger performance across its key business segments, particularly in the power sector, which remains its core area of operation. The earnings per share (EPS) for the quarter stood at ₹1.08, a substantial improvement from ₹0.30 in the same quarter of the previous year and a reversal from the negative EPS of -₹1.31 in the June 2025 quarter.

Financial Performance Summary

To provide a clear overview of the quarterly performance, the key financial metrics are summarized below.

Power Segment Drives Growth

The power segment, BHEL's primary revenue contributor, demonstrated solid performance during the quarter. Revenue from this segment grew by 12.9% year-on-year to reach ₹5,675.64 crore, compared to ₹5,028.28 crore in the September 2024 quarter. This growth is attributed to better execution of the company's large order book and a healthier project pipeline. The improved performance in this critical segment signals a potential revival in profitability for the engineering major, which has faced challenges in the past due to sluggish order inflows and execution delays. The company's focus on completing existing projects while securing new ones appears to be yielding positive results.

Market Reaction and Stock Movement

Investors reacted positively to the strong earnings report. BHEL's shares rallied by 4% on the day the results were announced, reaching a day's high of ₹255. This immediate positive reaction reflects market confidence in the company's turnaround story. Over a broader period, the stock has shown resilience. On a year-to-date basis, the stock has gained over 5%, and its one-year return stands at a healthy 24.11%. The long-term performance is even more impressive, with a three-year return of over 232%, rewarding investors who have stayed with the company through its recovery phase.

Strategic Wins and Order Book Strength

BHEL's financial performance is supported by a series of strategic order wins that have strengthened its future revenue visibility. The company recently secured a major order worth ₹5,400 crore for a coal gasification project in Odisha, where it will be responsible for design, engineering, and equipment supply. Furthermore, BHEL has commenced the supply of crucial components like traction converters for the prestigious Vande Bharat Sleeper Train project. These orders not only enhance the company's order book but also diversify its portfolio into emerging areas like advanced rail transportation and cleaner coal technologies.

Navigating the "China Factor" Headwind

Despite the strong operational performance, BHEL's stock has faced recent volatility due to external policy considerations. Reports suggesting that the Indian government might ease restrictions on Chinese firms bidding for government contracts triggered a sharp selloff in BHEL and other capital goods stocks. The concern is that increased competition from Chinese players could put pressure on BHEL's margins and market share. However, market experts and brokerages remain divided on the potential impact. While some analysts flag competitive risks, others, like JM Financial, believe that any relaxation, particularly at the component level, could benefit BHEL by lowering import costs and improving project execution timelines, leaving its market position largely intact.

Analyst Commentary and Future Outlook

The technical outlook for BHEL's stock appears positive to some analysts. The "Stock Radar" section in market reports highlighted that the stock has broken above a falling trendline resistance, hitting a fresh 52-week high recently. Some technical analysts have suggested a bullish outlook, with potential price targets in the range of ₹320-₹330 in the coming weeks. This optimism is based on the stock trading above key moving averages and the strong financial turnaround demonstrated in the latest quarterly results. The company's board is scheduled to meet on January 19, 2026, to formally approve the unaudited financial results.

Conclusion

Bharat Heavy Electricals Ltd.'s second-quarter results for FY26 mark a decisive step in its recovery journey. The impressive 253% surge in net profit and steady revenue growth highlight improved operational efficiency and strong project execution. Supported by a robust order book and strategic wins in key sectors, the company's fundamentals appear to be strengthening. However, investors will continue to monitor external factors, particularly potential changes in government procurement policies, which could influence the competitive landscape. Overall, the strong quarterly performance provides a solid foundation for BHEL as it aims for sustained profitability and growth.