Bharat Heavy Electricals Ltd (BHEL), whose shares have fallen 22 percent over the past month, is expected to report a reduction in its year-over-year losses in the September quarter. This would be the second consecutive quarter of losses for the PSU. BHEL, which reported strong thermal power order inflows in the second quarter, is expected to record over 20 per cent rise in revenue for the quarter.

BHEL’s Q2 revenue is expected to grow 22% year-on-year, with healthy execution in the energy and industrial segments, PL Capital said. The brokerage said BHEL’s Ebitda margin could improve by 780 basis points, driven by leverage in personnel costs and administrative costs. The outlook for thermal power and defense orders, gross margin, HVDC tenders and overall pace of execution will be the key things to watch, he said.

This brokerage sees BHEL reporting a reduction in losses to Rs 42.40 crore in the second quarter, compared to a loss of Rs 233.40 crore in the same quarter last year. It sees sales rising 21.80 per cent YoY to Rs 6,242.60 crore, compared to Rs 5,125.30 crore YoY.

BHEL shares settled at Rs 216.95 on Friday, down 4.51 per cent. The stock is up 9.38 percent in 2024 so far, compared to a 22.47 percent rise in the BSE PSU index.

BHEL recorded strong order intake in Q2FY25, including Rs 13,300 crore for DVC’s Koderma thermal power plant, Rs 11,000 crore for supply of equipment for 3 Adani Power projects and Rs 6,200 crore from NTPC for EPC of Sipat Thermal Power Project.

Kotak Institutional Equities expects BHEL to report an adjusted loss of Rs 201.20 crore. It forecasts a negative Ebitda margin of 2.1 percent in the seasonally weak quarter and factors in gross margin at the fiscal 2024 level. It expects BHEL sales to climb 21%. compared to the previous year to reach Rs 6,202.30 crore, driven by the energy and industrial segments.

Since FY2025, BHEL has received orders for 10 GW of projects. There are 8 GW of tenders that currently remain active. JM Financial expects them to be finalized by March 2025, given the government’s sense of urgency around adding capacity.

Additionally, 39 GW of projects are at various stages of decontamination, he noted.

“With a growing order book (1.3 GW/9.6 GW/10.4 GW during the financial year 23/24/2025), a limited competitive environment (8 GW in call for tenders, 39 GW in clearance) and a resumption of execution, we expect BHEL to return to its profitable growth trajectory from 3QFY25 and to generate revenue, Ebitda and PAT CAGR of 34 per cent, 150 per cent and 233 per cent , respectively, on exercises 24 to 26E. We continue to maintain buy on the stock with a target of Rs 361,” said JM Financier.