Despite reasonable valuation, BHEL stock could give investors a shock

Fundamentals are improving, but managing working capital and order inflows will be tough

The good news for Bharat Heavy Electricals (BHEL) is that analysts are turning positive on the stock. 

The optimism is also backed by fundamentals — largely attributable to improved order execution and cost optimisation — which are, in turn, perking up operating profit margins for the coal-fed power plant maker. In addition, acting upon the need to diversify, BHEL is shoring up its presence in segments such as locomotives, railway electrification and emission control equipment, which contributed about 30 per cent to total order inflows (Rs 23,860 crore) in FY19. 

Further, with Rs 725 crore of orders from alternate energy