New Delhi – Bharat Heavy Electricals Ltd (BHEL) saw its shares climb significantly in early Wednesday trading after announcing it had secured four substantial new projects from Adani Power Ltd. Each project is valued between Rs 5,000 crore and Rs 7,000 crore, excluding GST, marking a major boost for the public sector undertaking.
The contracts, officially communicated to stock exchanges, involve BHEL supplying critical equipment, including boilers, turbines, and generators, along with associated auxiliaries. Additionally, the agreements encompass a range of agreed services for each of the four power generation projects.
Market Reacts Positively to Adani Power Deal
Following the announcement, BHEL's stock rose 3.5 percent, hitting a high of Rs 413.45 apiece. Adani Power also saw a positive movement, with its shares adding 0.97 percent to reach Rs 197 apiece. This development reinforces BHEL's robust order book, which stood at an impressive Rs 2.58 lakh crore at the close of the September quarter.
Market analysts have largely viewed the deal favorably. Geojit, a prominent financial services firm, reiterated its 'BUY' rating for BHEL, setting a revised target price of Rs 453. Analysts at Geojit cited BHEL's established engineering capabilities and diversified business portfolio as key strengths. They anticipate that improved execution across BHEL's power and industrial segments, coupled with operating leverage, will drive significant EBITDA margin expansion and boost the company's return on equity (ROE) from 6.2 percent in FY26 to an estimated 15.6 percent by FY28.
Strategic Growth and Future Outlook
The securing of these four large-scale 2x800 MW projects from Adani Power underscores BHEL's pivotal role in India's energy infrastructure development. The contracts are expected to contribute substantially to BHEL's future earnings, potentially leading to a re-rating of its valuation in the market.
While some other firms like PL and Macquarie had previously held 'Reduce' or 'Neutral' ratings respectively, the scale and nature of these new projects are likely to shift market sentiment further towards a more optimistic outlook for BHEL.
This strategic win not only strengthens BHEL's financial position but also highlights its continued importance as a supplier of heavy electrical equipment for major power sector players like Adani Power, supporting India's growing energy demands.