BHEL gets one-notch rating upgrade to CARE AA/Stable
CARE lifts BHEL's long-term rating from AA- to AA on stronger profitability and order book. But for a ₹1,30,299 cr PSU, this is a modest, widely expected move.
— 2 earlier stories on Bharat Heavy Electricals Ltd. →What's new
- CARE Ratings upgraded BHEL's long-term rating to CARE AA/Stable from CARE AA-/Stable.
- Short-term rating reaffirmed at A1+, the highest tier.
- Upgrade reflects improved operational and financial performance in FY2025-26.
Why this matters
For a large-cap PSU already sitting at AA-, one notch higher is a positive but not a game-changer. The upgrade was largely baked in after BHEL reported strong earnings and bagged a record ₹21,000 cr order. It trims borrowing costs at the margin but doesn't alter the core investment thesis.
What we're watching
- Whether BHEL can sustain the profitability trajectory that triggered the upgrade.
- Execution of the massive order book, especially the ₹21,000 cr contract won in June 2026.
- Any further rating action if order conversion accelerates or margins surprise.
The full read
CARE Ratings has bumped BHEL's long-term credit rating by one notch to CARE AA/Stable, while reaffirming the short-term rating at A1+. The upgrade reflects a substantial rise in profitability and an expanding order book in FY2025-26. Hardly a surprise. For a company with a market cap of ₹1,30,299 cr and trailing P/E of 81.4, the move is modest. BHEL's latest quarter (Mar 2026) showed sales of ₹12,310 cr and net profit of ₹1,274 cr, but its ROE remains low at 2.2%. The upgrade was widely anticipated after the record ₹21,000 cr order win in June and strong earnings. It shaves borrowing costs at the margin but changes little else. The real test is whether BHEL can sustain the momentum and translate its order book into margins.
Questions answered
- What does the CARE AA/Stable rating imply?
- It indicates a high degree of safety regarding timely payment of financial obligations. 'Stable' outlook means the rating is unlikely to change in the near term.
- Why did CARE upgrade BHEL now?
- CARE cited a substantial rise in BHEL's profitability and a growing order book for FY2025-26, which strengthened its financial risk profile.
- Will this upgrade lower BHEL's borrowing costs?
- Modestly. A one-notch upgrade at this level can reduce interest spreads on fresh debt, but the effect is small for a company with a debt/equity of only 0.36.
- How does this upgrade compare to prior news like the ₹21,000 cr order?
- The upgrade is a lagging indicator. The market had already priced in the earnings momentum and order wins; the rating action merely validates them.
- What could trigger a further upgrade?
- Sustained improvement in return on equity (currently 2.2%) and consistent execution of the large order pipeline would be needed for another notch.
Bharat Heavy Electricals Ltd.
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Story so far
All notes on BHEL →- 12 Jun 2026 · 12:03 PM IST BHEL gets one-notch rating upgrade to CARE AA/Stable
- 31d ago BHEL lands ₹21,000 cr order, its biggest single contract
- 33d ago BHEL wins ₹2,500 cr power-equipment deal for Dangote's Nigeria refinery