Bharat Heavy Electricals Ltd (Q4 FY14)

India Infoline News Service | Mumbai |

BHEL registered de-growth of 21.7% yoy in topline to Rs150.3bn due to lack of demand from the captive power plants and slower execution at the major power producers.

CMP Rs246, Target Rs203, Downside 17.6% 
  • BHEL continues to report below par numbers in Q4 FY14

  • Topline declined sharply by 21.7% yoy to Rs150.3bn on account of slow moving orders and a decline in order backlog

  • Order inflows for the quarter stood at Rs163bn, lower by 21.6% yoy. Order book was lower by 11.8% yoy to 1,016bn largely due to order from NTPC

  • Operating margins shrunk by 604bps yoy to 18.2%, but marginally higher than our estimate  

  • The company cites 16GW of order pipeline in FY16. Share of BHEL of total orders announced in FY14 was 72%

  • Too much optimism built in; Maintain SELL with a revised price target to Rs203

Result table
(Rs m)
Q4 FY14
Q4 FY13
% yoy
Q3 FY14
% qoq
Net sales
150,315
192,044
(21.7)
86,349
74.1
Material costs
(86,728)
(106,288)
(18.4)
(48,801)
77.7
Personnel costs
(13,204)
(14,391)
(8.2)
(15,256)
(13.4)
Other overheads
(23,049)
(24,850)
(7.2)
(12,432)
85.4
Operating profit
27,334
46,515
(41.2)
9,859
177.2
OPM (%)
18.2
24.2
-604 bps
11.4
677 bps
Depreciation
(2,718)
(2,889)
(5.9)
(2,416)
12.5
Interest
(479)
(405)
18.3
(323)
48.5
Other income
2,889
2,924
(1.2)
2,908
(0.7)
PBT
27,025
46,144
(41.4)
10,028
169.5
Tax
(8,519)
(13,766)
(38.1)
(3,080)
176.6
Effective tax rate (%)
31.5
29.8

30.7

PAT
18,506
32,378
(42.8)
6,948
166.3
PAT margin (%)
12.3
16.9
-455 bps
8.0
426 bps
Ann. EPS (Rs)
6.0
10.6
  (42.8)
2.3
  166.3
Source: Company, India Infoline Research

Top-line degrowth continues

BHEL registered de-growth of 21.7% yoy in topline to Rs150.3bn due to lack of demand from the captive power plants and slower execution at the major power producers. The company has indicated that execution has been slower at the customer’s end due to lack of clearances for its projects and tight liquidity market conditions. The industry segment revenue declined 25.8% yoy due to lower demand from industries like cement and metals. The company highlighted that the demand scenario for captive power plants is bleak on account of lack of fuel availability and sluggish investment cycle. The management expects some revival in FY15. However, no specific revenue guidance was issued by the company unlike it did historically. We expect execution for power projects and industry segment to remain constrained given the issues in terms of clearances and funding, particularly for IPPs and slowdown in investment cycle. Availability of coal remains a critical issue as existing capacities are running quite below their rated capacities.


Outlook for order inflows remain sluggish

Order book at the end of Q4 FY14 stood at Rs1tn, lower by 11.8% yoy. Order inflow for the quarter was lower by 21.6% yoy on a strong base of Q4 FY13 to Rs163bn, largely on the back of orders from the PSU companies. Slow m

BSE 91.70 [0.55] ([0.60]%)
NSE 91.75 [0.35] ([0.38]%)

***Note: This is a NSE Chart

 

Advertisements

  • Save upto Rs.2.67 lakh with Pradhan Mantri Awas Yojana ...Know more
  • Now Save Rs.3150 on your Demat Account ...Click here
  • Now get IIFL Personal Loan in just 8* hours...APPLY NOW!
  • Get the most detailed result analysis on the web - Real Fast!
  • Actionable & Award-Winning Research on 500 Listed Indian Companies.