Bharat Heavy Electricals Ltd.
ISIN: INE257A01026 • Market Cap: ₹1.46 Lakh Cr
The 5-Pillar Quality Audit for Bharat Heavy Electricals Ltd.
Evaluated across Profitability, Financial Health, Historical Compounding, Valuation Safety, and Ownership Governance:
1. Profitability & Capital Efficiency
Weight: 25%Measures operating margins (9.4%), Return on Capital Employed (7.6%), and equity compounding (6.1%).
2. Financial Health & Solvency
Weight: 25%Debt-to-Equity is 0.30 with comfortable interest coverage and clean working capital.
3. Growth & Compounding Track Record
Weight: 20%Historical 3Y Sales CAGR (14.6%) and 3Y PAT CAGR (103.4%).
4. Valuation Multiple & Margin of Safety
Weight: 15%Trades at P/E of 59.91 vs PEG of 3.22 and Dividend Yield of 0.3%.
5. Ownership Quality & Governance
Weight: 15%Promoter holding stands at 58.2%, backed by 32.0% institutional ownership.
Key Fundamental Strengths
High-Velocity Profit Compounding (3Y PAT CAGR: 103.4%)
Net earnings have compounded at 103.4% annualized, demonstrating operating leverage.
Deep Institutional Sponsorship (32.0%)
Mutual funds, domestic DIIs, and foreign FIIs hold 32.0%, providing strong governance scrutiny.
Areas to Watch & Potential Risks
Subdued Capital Efficiency (ROCE: 7.6%)
A sub-12% ROCE suggests return on capital barely exceeds the company's weighted average cost of capital (WACC).
Sectoral & Macro Headwinds (Capital Goods)
Subject to broader cyclical demand, raw material price shifts, and regulatory frameworks governing the Capital Goods space.
Quantitative Strategy Eligibility
Checking BHEL against established Indian wealth creation frameworks:
Coffee Can Investing Framework
Fails 10%+ revenue growth or 15%+ minimum capital return benchmark over historical periods.
Quality Factor Screener (High RoIC + Low Debt)
Scorecard of 65/100 or leverage profile sits below strict quality index hurdles.
GARP / Value-Growth Blend
Valuation multiple or return metrics require further cyclical pullback.
Capital Goods Sector Peer Comparison
Compare BHEL directly against top industry peers by market capitalization:
| Company | 5-Pillar Score | Market Cap | P/E | ROCE | D/E | Scorecard |
|---|---|---|---|---|---|---|
| Bharat Heavy Electricals Ltd. (BHEL)Current | 65/100 | ₹1.46 Lakh Cr | 59.91 | 7.6% | 0.30 | — |
| Hindustan Aeronautics Ltd. (HAL) | 70/100 | ₹3.35 Lakh Cr | 35.94 | 13.9% | 0.00 | View |
| Bharat Electronics Ltd. (BEL) | 80/100 | ₹2.99 Lakh Cr | 48.61 | 32.7% | 0.00 | View |
| Tata Motors Ltd. (TMCV) | 71/100 | ₹1.76 Lakh Cr | 42.02 | 31.3% | 0.38 | View |
| ABB India Ltd. (ABB) | 72/100 | ₹1.57 Lakh Cr | 52.48 | 28.7% | 0.00 | View |
| Hitachi Energy India Ltd. (POWERINDIA) | 76/100 | ₹1.50 Lakh Cr | 129.99 | 26.7% | 0.00 | View |
Frequently Asked Questions: Bharat Heavy Electricals Ltd.
Q:What is the 5-Pillar Fundamental Score for Bharat Heavy Electricals Ltd. (BHEL)?
Bharat Heavy Electricals Ltd. has a RupeeTools Fundamental Score of 65/100, placing it in the 'Solid & Healthy' category. Its pillar scores are: Profitability (43/100), Financial Health (75/100), Growth (85/100), Valuation (40/100), and Ownership Quality (85/100).
Q:Is BHEL fundamentally strong for long-term investment?
BHEL currently holds a moderate quality rating of 65/100. While it operates in the Capital Goods sector, investors should monitor its profit margins before initiating long-term positions.
Q:Does BHEL pass the Coffee Can Investing filter?
No. BHEL does not currently meet the strict 15% ROCE and 10% sustained topline compounding threshold mandated by the Coffee Can investing framework.
Q:How does BHEL compare against other Capital Goods peers?
Within India's Capital Goods sector, BHEL trades at a P/E of 59.91 and generates an ROCE of 7.6%. Compare its 5-Pillar score of 65/100 against top sector peers like Hindustan Aeronautics Ltd. (70/100), Bharat Electronics Ltd. (80/100).
Regulatory & SEBI Research Analyst Compliance Disclaimer:
This 5-pillar fundamental score is an automated quantitative health check generated purely from historical public financial statements, corporate filings, and exchange disclosures for educational and informational purposes only. It does NOT constitute investment advice, a stock recommendation, or a solicitation to buy or sell securities. RupeeTools is not a SEBI-registered Research Analyst. Please consult a SEBI-registered financial advisor before making investment decisions.