BHEL Q3FY26 Results: Profit jumps 191% on strong margins, beats estimates despite revenue miss

BHEL Q3FY26 Results: State-owned power equipment maker Bharat Heavy Electricals Limited (BHEL) turned in a mixed December-quarter performance, delivering a sharp improvement in profitability and margins, even as revenue growth lagged Zee Business estimates due to the impact of legacy low-margin projects and higher employee-related expenses.

Profit up sharply, revenue trails expectations

For Q3FY26, BHEL posted a consolidated net profit of Rs 390 crore, marking a 191 per cent jump year-on-year from Rs 134 crore in the same period last year. The profit figure was marginally ahead of the Zee Business estimate of Rs 380 crore, aided by improved operational efficiency and higher other income.

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Revenue from operations rose 16.4 per cent to Rs 8,473 crore, up from Rs 7,277 crore a year earlier. However, the topline fell short of the Zee Business estimate of Rs 9,035 crore, which had assumed 18–23 per cent growth led by stronger execution in the power and industrial segments, supported by the rollout of nearly 34 GW of new projects.

Operating performance and margins

At the operating level, EBITDA increased 79 per cent year-on-year to Rs 546 crore, up from Rs 305 crore, but missed the Zee Business estimate of Rs 666 crore.

EBITDA margins expanded to 6.4 per cent, from 4.2 per cent a year ago, reflecting improved execution and cost efficiencies. However, margins remained below the 7 per cent level projected by Zee Business, which had expected a 350–500 basis point improvement on account of a better project mix. Near-term margins were impacted by the execution of legacy low-margin projects such as Patratu and Ennore, along with rising employee costs during the quarter.

Other income supports profitability

A sharp rise in other income provided a key cushion to profitability. Other income more than doubled to Rs 219 crore, compared with Rs 108 crore in the corresponding quarter last year, playing a crucial role in lifting the bottom line despite the revenue and EBITDA miss.

Strategic decision: Varanasi plant closure

In a key strategic move, BHEL’s board approved the short closure of the proposed new manufacturing facility in Varanasi, citing the current business environment. The unit, announced in January 2024, was planned for railway propulsion systems with an estimated investment of Rs 345 crore, to be funded through a mix of debt and equity, and an original timeline of two years.

The company said products originally earmarked for the Varanasi plant will now be manufactured at existing units, reflecting a more disciplined and flexible approach to capital allocation.

Stock performance

After the results were announced, BHEL shares experienced volatility, dipping as much as 3 per cent before stabilizing around Rs 265.20. Over the past 12 months, the stock has gained 23 per cent, and it has delivered a remarkable 580.95 per cent return over the last five years, reflecting sustained investor confidence in the company’s long-term prospects.