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BHEL - Fundamental Analysis: Financial Health & Valuation
Last Updated Time : 20 Dec 25, 11:15 pm
Back to Fundamental ListFundamental Rating: 2.8
| Stock Code | BHEL | Market Cap | 96,175 Cr. | Current Price | 276 ₹ | High / Low | 295 ₹ |
| Stock P/E | 178 | Book Value | 71.2 ₹ | Dividend Yield | 0.18 % | ROCE | 4.75 % |
| ROE | 2.00 % | Face Value | 2.00 ₹ | DMA 50 | 269 ₹ | DMA 200 | 248 ₹ |
| Chg in FII Hold | -0.13 % | Chg in DII Hold | 0.17 % | PAT Qtr | 368 Cr. | PAT Prev Qtr | -455 Cr. |
| RSI | 48.6 | MACD | 2.13 | Volume | 44,79,083 | Avg Vol 1Wk | 45,52,886 |
| Low price | 176 ₹ | High price | 295 ₹ | PEG Ratio | 24.6 | Debt to equity | 0.44 |
| 52w Index | 84.0 % | Qtr Profit Var | 280 % | EPS | 1.56 ₹ | Industry PE | 43.9 |
📊 Core Financials
- Quarterly PAT improved sharply from -455 Cr. to 368 Cr. (280% turnaround).
- ROE at 2.0% and ROCE at 4.75% indicate weak efficiency and profitability.
- Debt-to-equity ratio of 0.44 shows moderate leverage but manageable risk.
- Dividend yield at 0.18% is minimal, reflecting limited cash returns to shareholders.
💹 Valuation Indicators
- P/E Ratio: 178 vs Industry PE of 43.9 → Extremely overvalued.
- P/B Ratio: Current Price / Book Value ≈ 3.88 → Expensive relative to assets.
- PEG Ratio: 24.6 → Suggests poor earnings growth relative to valuation.
- Intrinsic Value Zone: ₹200–₹230 (near DMA 200).
🏭 Business Model & Competitive Advantage
- Core focus on power equipment, heavy engineering, and infrastructure projects.
- Strong government backing as a PSU with strategic importance in energy sector.
- Competitive advantage lies in scale, but profitability remains inconsistent.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive accumulation between ₹200–₹230.
- Long-Term Holding: Suitable only for investors with high risk tolerance; valuation risks are significant.
✅ Positive
- Strong turnaround in quarterly profits (PAT swing from loss to profit).
- Government-backed PSU with strategic importance in power and infrastructure.
- Moderate debt-to-equity ratio (0.44).
⚠️ Limitation
- Extremely high P/E ratio (178) compared to industry average.
- Weak ROE (2.0%) and ROCE (4.75%).
- Low dividend yield (0.18%).
📉 Company Negative News
- Historically inconsistent profitability and weak return metrics.
- Decline in FII holdings (-0.13%).
📈 Company Positive News
- Strong quarterly profit recovery (368 Cr. vs -455 Cr.).
- Increase in DII holdings (+0.17%).
🌐 Industry
- Power equipment and infrastructure sector is cyclical, dependent on government spending.
- Industry PE at 43.9 indicates moderate valuation compared to BHEL’s premium.
- Sector growth supported by renewable energy and infrastructure expansion initiatives.
🔎 Conclusion
- BHEL shows signs of recovery but remains overvalued with weak efficiency metrics.
- Best suited for speculative investors betting on government-led infrastructure growth.
- Accumulation recommended near ₹200–₹230 for better risk-reward balance.
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