Brokerage firm Antique Stock Broking expects Bharat Heavy Electricals Ltd.'s (BHEL) earnings to grow five-fold over between financial year 2024-2026, aided by strong ordering, improved execution and benefits of operating leverage.

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In its post-earnings call, the management of BHEL highlighted a structural turnaround in the power equipment market and also reiterated its focus to make half of the business from the industry segment in the medium term.

"We believe BHEL is expected to witness a meaningful reversal in its ordering cycle over the next 3-4 years, led by both industry and power segments," Antique wrote in its note. The brokerage has maintained its buy rating on the stock with a price target of Rs 110.

BHEL's net profit fell by a third during the March quarter due to higher input costs and employee expenses.

The company in a consortium with Titagarh Wagons Ltd has bagged orders worth Rs 23,500 crore for 80 Vande Bharat trains. The company’s scope of work includes electrics and the control systems and the bogies, BHEL told analysts in a conference call.

However, due to aggressive pricing, Vande Bharat margins are expected to be ‘challenging’ and it sees profits to accrue more during the 35-year maintenance period.

The company’s order book as of March 31, 2023, was at Rs 91,336 crore while the fourth quarter saw order inflows of Rs 5,709 crore. The company bagged the Vande Bharat order after the start of financial year 2024.

BHEL also told analysts that the company is favorably placed in the power sector with 3.7 GW worth of orders.

The company is also bullish on the transport sector as the Railways is expected to invest heavily in both freight and passenger segments, translating into demand for electric locomotives, semi high-speed train sets of different configurations, etc.

BHEL has received orders for 22 WAG-9H locomotives, 90 sets of IGBT-based three-phase drive propulsion equipment for WAG-9, 16 sets of three-phase AC propulsion systems for Kolkata Metro, and propulsion equipment and other electrics for four Vande Bharat trains, amongst others, it informed analysts.

Shares of BHEL are trading with gains of nearly 5 percent at Rs 82.75.