Shares of Bharat Heavy Electricals Ltd recovered strongly in early trade on Friday, snapping a one-day rout that had rattled investors across the capital-goods space. The stock rose over 3 percent to trade around ₹280.75, clawing back part of Thursday’s nearly 9 percent decline, when it had hit the lower circuit intraday.

Thursday’s sharp selloff in BHEL was not driven by company-specific fundamentals but by broader policy-related concerns. Reports suggesting that India may ease restrictions on Chinese companies bidding for government contracts triggered a swift reassessment of competitive dynamics in the capital-goods sector. Investors reacted by aggressively cutting exposure to domestic engineering and infrastructure names, fearing pricing pressure and margin risks if Chinese firms are allowed greater access to large public-sector projects.

BHEL, being one of the most visible public-sector capital-goods players, bore the brunt of this sentiment-driven selloff. The decline also spilled over to peers such as Siemens, ABB India and Larsen & Toubro, highlighting how sensitive the sector remains to policy signals.

Sentiment improved on Friday after global brokerage UBS initiated coverage on BHEL with a ‘Buy’ rating and a target price of ₹375 per share. The target implies an upside of over 35 percent from Thursday’s closing levels, providing a strong counterweight to the policy overhang that dominated trade a day earlier.

The UBS note emphasised strong order inflows and improving execution visibility as key drivers for its positive stance. The brokerage appears to be focusing on the company’s operational momentum rather than near-term policy uncertainty, a shift that helped bring buyers back into the stock.

The rebound is significant because it suggests that institutional investors may be willing to look past episodic policy fears if the underlying order book and execution outlook remain intact. For BHEL, which has historically traded at a discount due to execution delays and working capital concerns, sustained order momentum is critical to any durable re-rating.

UBS specifically highlighted BHEL’s ₹5,400-crore coal gasification and raw syngas cleaning plant order from BCGCL, a joint venture between Coal India and BHEL. The project is for a coal-to-ammonium-nitrate plant and marks the first commercial deployment of BHEL’s proprietary Pressurised Fluidised Bed Gasification (PFBG) technology. The order carries a 42-month execution timeline along with a 60-month operations and maintenance tenure, offering long-term revenue visibility.

This project is strategically important as it positions BHEL not just as an EPC contractor but also as a technology provider in emerging clean-coal and energy-transition-linked applications.