BHEL returns to profit, but Q1 margin falls sharply from Q4
Year-on-year revenue growth restored operating profit, while slower sequential cost reduction pulled margin down 7.69 percentage points.
Filed 16 Jul 2026, 14:20 IST · Bharat Heavy Electricals Ltd (BHEL)
Key takeaways
- Consolidated revenue rose 40.29% year on year, turning operating profit positive at Rs 503.86 cr from a loss of Rs 537.14 cr.
- Sequentially, operating margin narrowed 7.69 percentage points to 6.55% as revenue fell 37.47% while expenses declined only 31.86%.
- Other income contributed 44.44% of pre-tax profit, making the Rs 376.71 cr consolidated net profit less dependent on operations alone.
Price around the results
Year-on-year turnaround loses Q4 momentum
BHEL’s consolidated Q1FY27 revenue grew 40.29% year on year, while expenses grew 19.42%, reversing the operating loss reported in Q1FY26. The sequential comparison was weaker: revenue fell 37.47% from Q4FY26 and operating profit dropped 71.26%, showing how much the previous quarter’s result had lifted the base.
Costs and non-operating income shape the quarter
Sequentially, expenses declined less than revenue, so operating margin contracted by 7.69 percentage points to 6.55%; interest expense still fell 29.18%. Other income accounted for 44.44% of pre-tax profit, while the tax rate increased 0.5 percentage points sequentially, so the net profit outcome received meaningful support outside operating earnings.
Margin remains below reported industrial peers
The 6.55% operating margin was 8.09 percentage points below the 14.64% median for 23 Industrials peers that had reported the same quarter, placing BHEL second from the bottom. The margin had improved to 7.73% in Q2FY26 and 14.24% in Q4FY26, but Q1FY27 returned close to the 6.44% recorded in Q3FY26.
Initial stock gain was within BHEL’s usual result-day range
The stock rose 4.18% on the results date, eased to a 0.97% gain on the following session and was down 2.00% after five sessions. Across the last eight results reactions, moves were evenly split between four rises and four falls, with a median absolute move of 4.95%, making the initial response smaller than the stock’s typical move.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹7,698 cr | ₹12,310 cr | -37.47% | +40.29% |
| Other income | ₹226 cr | ₹260 cr | -13.20% | +22.06% |
| Expenses | ₹7,194 cr | ₹10,557 cr | -31.86% | +19.42% |
| Operating profit | ₹504 cr | ₹1,753 cr | -71.26% | — |
| Operating margin (%) | 6.55% | 14.24% | — | — |
| Interest | ₹140 cr | ₹198 cr | -29.18% | -22.81% |
| Depreciation | ₹82 cr | ₹88 cr | -6.85% | +9.88% |
| Profit before tax | ₹508 cr | ₹1,728 cr | -70.61% | — |
| Tax | ₹131 cr | ₹437 cr | -70.03% | — |
| Net profit | ₹377 cr | ₹1,290 cr | -70.81% | — |
| EPS (₹) | ₹1.08 | ₹3.71 | -70.89% | — |
Operating margin of 6.55% compares with a Industrials sector median of 14.64% across 23 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +4.18% | +4.20% |
| Next session | +0.97% | — |
| 5 sessions | -2.00% | -1.13% |
Volume on the results session was 3.59× its 20-day average.
What to watch
- Whether operating margin holds above 6.55% after the 7.69-percentage-point sequential decline.
- Whether expenses continue to grow more slowly than revenue, as they did year on year at 19.42% versus 40.29%.
- Whether other income remains below or above its 44.44% contribution to pre-tax profit.