Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2019 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Bhel: March quarter magic! - Views on News from Equitymaster

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

  • MyStocks


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

Bhel: March quarter magic!

Apr 3, 2002

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).

(Rs m) 4QFY01 4QFY02 Change FY01 FY02 Change
Net sales 27,471 30,612 11.4% 59,986 68,505 14.2%
Other Income 1,373 542 -60.5% 2,414 1,645 -31.9%
Expenditure 23,070 24,313 5.4% 55,881 58,904 5.4%
Operating Profit (EBDIT) 4,401 6,299 43.1% 4,105 9,601 133.9%
Operating Profit Margin (%) 16.0% 20.6%   6.8% 14.0%  
Interest 293 343 17.1% 438 1,057 141.3%
Depreciation 382 394 3.1% 1,578 1,691 7.2%
Profit before Tax 5,099 6,104 19.7% 4,503 8,498 88.7%
Deffered revenue exp. write off 317 617 94.6% 1,562 1,997 27.8%
Tax -185 1,998   -185 1,998  
Profit after Tax/(Loss) 4,967 3,489 -29.8% 3,126 4,503 44.0%
Net profit margin (%) 18.1% 11.4%   5.2% 6.6%  
No. of Shares (m) 244.8 244.8   244.8 244.8  
Diluted Earnings per share* 81.2 57.0   12.8 18.4  
Current P/E ratio (x)   2.9     9.1  

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. 

(Rs m) FY01 FY02 Change
Orders inflow 55,570 98,360 77.0%
Value added per employee 0.51 0.65 26.7%
Megawatt commissioned (MW) 2,914 2,165 -25.7%

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.

Cost break-up
(Rs m) 4QFY01 4QFY02 Change FY01 FY02 Change
(Increase)/decrease in stock-in-trade 137 3,384 2370.1% -2,507 299 -
Consumption of raw materials 15,033 13,339 -11.3% 32,933 34,328 4.2%
Staff Cost 4,852 4,119 -15.1% 16,562 14,703 -11.2%
Excise Duty 2,987 3,130 4.8% 6,337 6,910 9.0%
Other expenditure 3,048 3,471 13.9% 8,893 9,574 7.7%
Total expenditure 26,057 27,443   62,218 65,814  

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.

Equitymaster requests your view! Post a comment on "Bhel: March quarter magic! ". Click here!


More Views on News

VA TECH WABAG Surges by 6%; BSE CAPITAL GOODS Index Up 4.3% (Market Updates)

May 20, 2019 | Updated on May 20, 2019

VA TECH WABAG share price has surged by 6% and its current market price is Rs 290. The BSE CAPITAL GOODS is up by 4.3%. The top gainers in the BSE CAPITAL GOODS Index are VA TECH WABAG (up 5.8%) and HEG (up 6.0%). The top losers is FINOLEX CABLES (down 0.5%).

BHEL Announces Quarterly Results (3QFY19); Net Profit Up 25.3% (Quarterly Result Update)

Feb 13, 2019 | Updated on Feb 13, 2019

For the quarter ended December 2018, BHEL has posted a net profit of Rs 2 bn (up 25.3% YoY). Sales on the other hand came in at Rs 73 bn (up 10.7% 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?

BHEL Announces Quarterly Results (2QFY19); Net Profit Up 60.4% (Quarterly Result Update)

Nov 9, 2018 | Updated on Nov 9, 2018

For the quarter ended September 2018, BHEL has posted a net profit of Rs 2 bn (up 60.4% YoY). Sales on the other hand came in at Rs 68 bn (up 7.7% YoY). Read on for a complete analysis of BHEL's quarterly results.

More Views on News

Most Popular

These Dividend Stocks Could Boost Your Returns Better Than You Can Imagine(Profit Hunter)

May 7, 2019

The art of dividend investing is a lot more than investing in companies with high dividend payouts or stocks with high dividend yields...

3 Indian Stocks Replicating Amazon's Successful Strategy(The 5 Minute Wrapup)

May 10, 2019

The one critical element that has made Amazon a force to reckon with...

My Top 7 Stocks to Profit from Sensex 100,000(The 5 Minute Wrapup)

May 16, 2019

Tanushree Banerjee explains everything you need to know about the Rebirth of India and Sensex 100,000.

A Simple Checklist for Picking Great Dividend Stocks(Profit Hunter)

May 9, 2019

A filtered, neat list of high-dividend stocks with all this dirty work already done for you.

A 10-Bagger in Just 6 Years! The Rebirth of India Will Create More Big Winners Like This(The 5 Minute Wrapup)

May 7, 2019

How a niche tech startup battled all odds to eventually become a 10 bagger.


Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2019
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms


May 20, 2019 (Close)