India's No. 1 engineering behemoth, Bharat Heavy Electricals Limited (Bhel), continued its journey towards recovery. As per the detailed figures released by the management, Bhel recorded the highest ever net sales of Rs 68,505 m (up 14% YoY) in FY02. More importantly, it earned Rs 4.5 bn as net profit during the period (up 44% YoY).
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Deffered revenue exp. write off
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (m)
Diluted Earnings per share*
Current P/E ratio (x)
Profit before tax rose by a significant 89% YoY to 8.5 bn. Operating margins more than doubled to 14% during the year. Bhel recorded over 11% growth in 4QFY02 topline and a 30% drop in bottomline YoY. However, the bottomline performance in 4QFY02 is not comparable with last year, as the March quarter in FY01 witnessed exceptional turnaround in fortunes.
Bhel also secured the highest ever orders worth Rs 98.4 bn (up 77% YoY) from domestic and overseas markets during the year, despite subdued trend in power as well as industrial sectors of the country. Cumulative orders in hand, for execution in future years, stand at over Rs 120 bn at the end of FY02.
Value added per employee
Megawatt commissioned (MW)
During the year, the company added 26 sets constituting 2165 MW in the country. In the utility segment, Bhel exceeded CEA's commissioning target by 20%. With this, the installed capacity of Bhel utility sets went up to 66,917 MW, and consequently, the company maintained its share of 65% in the country's total installed capacity. Another encouraging factor is that the company has continued its relentless employee rationalisation drive. Its employee numbers have come down from over 62,000 in FY99 to 48,000 currently.
Though the performance has been very good, Bhel continues to record a bulk of its earnings in the March quarter (4Q). In FY01, the company had declared losses to the tune of Rs 1.8 bn in the first nine months of the year (April-December 2000). It then recorded a stupendous comeback logging Rs 4.9 bn as net profit in the March quarter alone (January-March 2001), thus finishing FY01 with a face saving Rs 3.1 bn earnings. In FY02 too, the trend is similar. In the first nine months (April-December 2001) Bhel declared a little over Rs 1 bn as net profits. It is the March quarter that has proved to be the saving grace this year too, with over 3.4 bn as earnings.
(Increase)/decrease in stock-in-trade
Consumption of raw materials
This skewness towards the 4QFY02 can be partly explained by the fact that Bhel executes large projects and earnings sway as and when these projects actually get finished. So, it is quite possible that a bulk of its orders got executed in March quarter thus giving it such growth. With over Rs 120 bn in orders, Bhel looks set for a vibrant FY03, though we suspect the earnings may continue to sway from one extreme to the other in future too.
We had projected a conservative 12% growth in sales and Rs 4.2 bn as net profits. Bhel has just about managed to beat these projections. At the current price of Rs 167 the stock trades at 9x FY02 earnings. Though FY03 looks very promising for Bhel, its sheer size and PSU nature will temper the positive sentiment in the long term. Also, with the focus of the power policy shifting from generation to T&D, Bhel will have to refocus its strengths on this segment.
BHEL has announced third quarter results for the financial year 2016-2017. The company has reported an 18% YoY growth in sales, and a Rs 875 million net profit during the period. Here is our analysis of the results.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407