Bhel: Good comeback but… - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Bhel: Good comeback but…

Jan 28, 2002

India's No. 1 engineering behemoth, Bharat Heavy Electricals Limited (Bhel), continued its journey towards recovery. Against a loss of Rs 1,980 m posted in December quarter last year, Bhel posted a net profit of Rs 802 m in December quarter 2001. The engineering major's gross sales (including excise duties) are up 16% during the quarter.

(Rs m) 3QFY01 3QFY02 Change 9m FY01 9m FY02 Change
Gross sales 13,888 16,098 15.9% 35,865 41,673 16.2%
Other Income 348 288 -17.3% 1,040 1,103 6.0%
Expenditure 14,986 14,115 -5.8% 36,162 38,371 6.1%
Operating Profit (EBDIT) -1,098 1,983   -297 3,302  
Operating Profit Margin (%) -7.9% 12.3%   -0.8% 7.9%  
Interest 91 329 259.6% 144 714 394.2%
Depreciation 420 469 11.6% 1,196 1,297 8.5%
Profit before Tax -1,262 1,473   -597 2,394  
Deffered revenue exp. write off 749 580 -22.6% 1,244 1,380 10.9%
Tax -32 92   0 -1  
Profit after Tax/(Loss) -1,980 802   -1,842 1,014  
Net profit margin (%) -14.3% 5.0%   -5.1% 2.4%  
No. of Shares (m) 244.8 244.8   244.8 244.8  
Diluted Earnings per share* -32.4 13.1   -10.0 5.5  
Current P/E ratio (x)   11.4     27.0  
*(annualised)            

On a nine month consolidated basis (April - December, 2001), the company has recorded a 16% YoY growth in topline and a net profit of Rs 1,014 m (as compared to Rs 1,842 m loss last year). Bhel was hit last year by a huge jump in its staff costs. Moreover, the previous year had seen sluggish topline growth (down 12% YoY).

Bhel has raised Rs 5,000 m through issue of bonds to meet its long term funds requirements. As a result, its debt servicing cost (interest expenses) shot up this quarter. Had it not been for the higher interest burden, Bhel would have finished the quarter with an even better performance.

However, despite this recovery Bhel still has a long way to go. In the nine month period of FY00 (April - December 1999), the company had declared Rs 2,459 m as net profit. Compared to this, its profits of Rs 1,014 m in the current year's nine months, pale in comparision. Also, Bhel has had the benefit of negligible taxes in the current year. There is likelihood that going forward the tax liability will not be low.

At Rs 149 the stock trades at a P/E of 27x annualised nine month FY02 earnings. The valuations seem higher as the earnings are low. Inconsistency in performance has always been Bhel's weakness and as such its valuations are likely to remain range bound.


Equitymaster requests your view! Post a comment on "Bhel: Good comeback but…". Click here!

  

More Views on News

BHEL Announces Quarterly Results (3QFY20); Net Profit Down 17.3% (Quarterly Result Update)

Feb 13, 2020 | Updated on Feb 13, 2020

For the quarter ended December 2019, BHEL has posted a net profit of Rs 2 bn (down 17.3% YoY). Sales on the other hand came in at Rs 57 bn (down 22.6% YoY). Read on for a complete analysis of BHEL's quarterly results.

BHEL Announces Quarterly Results (1QFY20); Net Profit Down 239.0% (Quarterly Result Update)

Aug 13, 2019 | Updated on Aug 13, 2019

For the quarter ended June 2019, BHEL has posted a net profit of Rs 2 bn (down 239.0% YoY). Sales on the other hand came in at Rs 45 bn (down 23.7% YoY). Read on for a complete analysis of BHEL's quarterly results.

BHEL 2017-18 Annual Report Analysis (Annual Result Update)

Dec 19, 2018 | Updated on Dec 19, 2018

Here's an analysis of the annual report of BHEL for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of BHEL. Also includes updates on the valuation of BHEL.

Garden Reach Shipbuilders and Engineers Ltd: Is This PSU Shipbuilder Worth Betting On? (IPO)

Sep 24, 2018

Should you apply for the IPO of Garden Reach Shipbuilders and Engineers Ltd?

More Views on News

Most Popular

How to Find the Best Stocks for Day Trading - 1 (Fast Profits Daily)

Jul 2, 2020

In the first of two videos, I'll show you how to identify the best stocks for intraday trading.

Two Agri Stocks Are Likely to Outperform Even in this Market (Profit Hunter)

Jul 2, 2020

Why we have recommended two agriculture stocks for our Hidden Treasure subscribers. Read on...

A Warning for Traders: Don't Get Addicted to Hopium (Fast Profits Daily)

Jun 30, 2020

If you are a trader, you must watch out for this dangerous addiction.

Smallcaps Are in a Sweet Spot Again: Are You Buying? (Profit Hunter)

Jul 3, 2020

This is why I believe smallcaps are the place to be in the near future.

More

India's #1 Trader
Reveals His Secrets

The Secret to Increasing Your Trading Profits Today
Get this Special Report, The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

BHEL SHARE PRICE


Jul 10, 2020 (Close)

TRACK BHEL

COMPARE BHEL WITH

MARKET STATS