BHEL margin rebounds as revenue growth outpaces cost growth
Operating margin improved 4.48 percentage points sequentially, but remained below the 14.24% recorded in Q4FY26 and the 12.43% peer median.
Filed 14 Oct 2026, 13:38 IST · Bharat Heavy Electricals Ltd (BHEL)
Key takeaways
- Consolidated operating margin widened 4.48 percentage points QoQ to 11.03% as revenue grew 20.82% faster than expenses at 15.02%.
- Net profit rose 118.98% YoY to Rs 820.94 cr, helped by a 36.08% decline in interest expense and a 0.29 percentage-point lower tax rate.
- Other income contributed 24.89% of pre-tax profit, while BHEL's operating margin remained 1.40 percentage points below the 12.43% median of five Industrials peers.
Price around the results
Revenue recovery improves operating conversion
Consolidated revenue grew 20.82% sequentially and 23.81% year on year, while operating profit increased 103.59% QoQ and 76.58% YoY. The sharper rise in operating profit reflects better conversion as expenses grew 15.02% QoQ and 19.39% YoY, both below revenue growth. This lifted operating margin by 4.48 percentage points from Q1FY27 and by 3.30 percentage points from Q2FY26.
Lower interest costs supported profit quality
Interest expense fell 10.80% QoQ and 36.08% YoY, adding to the operating improvement. Other income was 24.89% of pre-tax profit, so a meaningful part of reported profit came from below-operating-line income. The tax rate also declined by 1.18 percentage points sequentially and 0.29 percentage points year on year, providing a smaller additional lift to net profit.
Margin rebounds but stays below the recent peak
Operating margin recovered from 6.55% in Q1FY27 and 6.44% in Q3FY26 to 11.03%, but remained below the 14.24% reported in Q4FY26. BHEL's margin was also 1.40 percentage points below the 12.43% median for the five Industrials peers that have reported. The quarterly pattern shows a sharp recovery from the Q1FY27 low rather than a sustained move above the latest peak.
No current market reaction; recent moves have been mixed
The stock's reaction to this filing is not yet available. Across eight recent result reactions, the stock rose five times and fell three times, with a median absolute move of 4.95%, indicating that post-result moves have been mixed rather than consistently positive or negative.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹9,300 cr | ₹7,698 cr | +20.82% | +23.81% |
| Other income | ₹271 cr | ₹226 cr | +20.18% | +43.47% |
| Expenses | ₹8,275 cr | ₹7,194 cr | +15.02% | +19.39% |
| Operating profit | ₹1,026 cr | ₹504 cr | +103.59% | +76.58% |
| Operating margin (%) | 11.03% | 6.55% | — | — |
| Interest | ₹125 cr | ₹140 cr | -10.80% | -36.08% |
| Depreciation | ₹83 cr | ₹82 cr | +1.47% | +10.10% |
| Profit before tax | ₹1,089 cr | ₹508 cr | +114.51% | +118.15% |
| Tax | ₹268 cr | ₹131 cr | +104.70% | +115.64% |
| Net profit | ₹821 cr | ₹377 cr | +117.92% | +118.98% |
| EPS (₹) | ₹2.36 | ₹1.08 | +118.52% | +118.52% |
Operating margin of 11.03% compares with a Industrials sector median of 12.43% across 5 peers that have reported Q2FY27.
What to watch
- Whether operating margin holds above 11.03% after the 14.24% level in Q4FY26.
- Whether expenses continue to grow more slowly than revenue, after 15.02% QoQ expense growth versus 20.82% revenue growth.
- Whether other income remains a material contributor after accounting for 24.89% of pre-tax profit.