Analysts caution on BHEL shares despite surprise profit in Q2

BHEL shares rose over 6% after the company reported a surprise profit for the September quarter, contrary to expectations of a loss. However, analysts remain cautious, with CLSA maintaining an "underperform" rating and a price target of ₹189, indicating potential further declines. Despite a 33% increase in operational execution and improved gross margins, CLSA noted that BHEL's stock is overvalued at 40 times projected earnings for 2026. Concerns about future market dominance have increased with Larsen & Toubro entering the thermal power equipment sector. Out of 17 analysts covering BHEL, 10 have a "sell" rating, with price targets ranging from ₹70 to ₹364. BHEL shares closed at ₹231.05 on Monday.