Bharat Heavy Electricals Ltd (BHEL) reported a net profit of ₹377 crore for the June quarter (Q1FY27), marking its first profit after seven consecutive years of losses in the same quarter. The company's consolidated EBITDA reached ₹504 crore, a significant turnaround from a loss of ₹537 crore a year earlier, according to a report by Livemint. This performance exceeded market expectations, driven by strong execution and a 40% increase in revenue to ₹7,700 crore.
Profitability and Execution
BHEL's gross margin expanded by 200 basis points year-on-year, attributed to the execution of newer orders that yield higher realizations. However, the company experienced a sequential drop in EBITDA margin to 6.5% in Q1FY27 from 14.2% in Q4FY26, reflecting the typical seasonality in the capital goods sector. Historically, BHEL's Q4 results contribute significantly to its annual performance, accounting for over one-third of revenue and 77% of EBITDA in FY26.
Order Book Growth
BHEL's order inflow doubled year-on-year to ₹26,745 crore in Q1FY27, with an order backlog increasing by 27% to ₹2.6 trillion, equivalent to approximately 7.2 times its trailing 12-month sales. This surge in order inflows, averaging about ₹82,000 crore annually during FY24-26, contrasts sharply with the less than ₹15,000 crore averaged during FY19-23. Analysts noted that BHEL's advance planning and improved vendor operations have contributed to this positive trend.
The strong earnings report and increased order inflow are likely to boost investor confidence in BHEL, potentially impacting the capital goods sector positively. Investors will watch for future quarterly results to assess the sustainability of this turnaround.