X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 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.
BSES: Tearful FY03 - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Apr 21, 2003

    BSES: Tearful FY03

    BSES, one of India's leading private utilities, has had a somewhat lacklustre FY03. The company finished the year with over 3% growth is sale of electrical energy. This is much lower than its past average of over 4% growth in the last 4-5 years. However, a 25% dip in its other income, as well as over 15% increase in both interest burden and depreciation provisioning has resulted in over 42% fall in the company's FY03 net profits.

    (Rs m) 4QFY02 4QFY03 Change FY02 FY03 Change
    Sale of electrical energy 4,629 4,687 1.3% 22,331 23,033 3.1%
    Income from EPC, contracts & computer division 1,326 1,430 7.9% 4,368 3,885 -11.1%
    Total operating income 5,955 6,118 2.7% 26,699 26,919 0.8%
    Other Income 637 351 -44.9% 1,127 849 -24.7%
    Expenditure 5,379 5,555 3.3% 21,901 22,879 4.5%
    Operating Profit (EBDIT) 577 562 -2.5% 4,799 4,040 -15.8%
    Operating Profit Margin (%) 9.7% 9.2%   18.0% 15.0%  
    Interest 161 244 51.4% 657 764 16.1%
    Depreciation 708 644 -9.0% 2,251 2,598 15.4%
    Profit before Tax 345 26 -92.6% 3,018 1,526 -49.4%
    Tax 25 -225 -986.2% 211 -97 -145.9%
    Profit after Tax/(Loss) 319 251 -21.5% 2,807 1,623 -42.2%
    Net profit margin (%) 6.9% 5.3%   12.6% 7.0%  
    No. of Shares (eoy) (m) 137.8 137.8   137.8 137.8  
    Diluted Earnings per share* 9.3 7.3   20.4 11.8  
    *(annualised)            
    Current P/e ratio   30.5     18.8  

    The company's release states that in FY03, BSES has discontinued its previous policy of raising bills on customers on an estimated/provisional basis in cases where meter readings were not available. This change has resulted in withdrawals of bills aggregating Rs 1,350 m raised in past periods. Excluding this change in billing policy overall revenues would have shown an increase of 5% YoY and profits would have been at Rs 2,970 m (an increase of 6%).

    The company generated 3,965 million units (MUs) during FY03 (an increase of 3.1% YoY), and sold 5,880 MUs (up 3.6% YoY). In the fourth quarter (i.e. March quarter), while sales of electrical energy is up marginally by over 1%, EPC business is up by an encouraging 7%.

    Power stats...
    (MUs) FY02 FY03 Change
    Generation 3847 3965 3.1%
    Sale of electricity 5676 5880 3.6%
    Bought from Tata Power 1829 1915 4.7%

    BSES's problems continued to grow in FY03. On the one hand, the company's growth in the Mumbai circle is pegged at only 4% per annum, its EPC and contracts business is too volatile for comfort. Right now, it is only earning from the Mumbai circle and its distribution ventures in Orrisa and Delhi are currently in the red. Infact, in its release, the company has mentioned that the networth of its Orrisa venture has eroded. Its generation business in Kerala too is in losses. However, the encouraging aspect is that the Kerala plant has been restarted in December end, after remaining closed from October 2001 over non payment of outstanding dues by Kerala State Electricity Board (KSEB). Also, the MERC order over standby charges to Tata Power continues to hang in fire. Though in the long term, BSES's investments in Kerala, Orrisa and Delhi are likely to bear fruit, in the short term the paucity of returns from these investments in hitting the company's operating performance.

    In order to improve its financial picture, the new management (Reliance group) decided to hive off BSES's subsidiaries. BSES Andhra Power, BSES Kerala Power, BSES Rajdhani Power, BSES Yamuna Power Ltd, the 3 Orrisa distribution circle companies and Tamil Nadu Industries Captive Power Company have ceased to be subsidiaries of the company with effect from March 29, 2003. So FY04 is likely to paint a better picture for the company.

    Cost break-up
    (Rs m) 4QFY02 4QFY03 Change FY02 FY03 Change
    Cost of energy purchased 1,872 2,272 21.4% 9,918 11,329 14.2%
    Cost of fuel 1,067 1,098 2.9% 4,222 4,299 1.8%
    Costs related to EPC and others 853 1,075 26.0% 3,486 3,092 -11.3%
    Tax on electricity 94 56 -39.8% 426 372 -12.5%
    Staff cost 331 311 -5.9% 1,154 1,100 -4.7%
    Other expenses 1,163 744 -36.0% 2,696 2,686 -0.3%
    Total expenditure 5,379 5,555 3.3% 21,901 22,879 4.5%

    The fact that the Reliance group has formally taken over the management control of the company is encouraging from the long term perspective. The group's technical and financial strengths will aid the company in achieving its stated vision of 9,000 MW electricity generation by 2012 (currently 885 MW). The new management has hinted that BSES is likely to be their vehicle for power and EPC led forays.

    At Rs 222 the stock currently trades at 18.8x FY03 earnings. The stock has been range bound in the last six months despite the poor performance. Investors continue to hold the stock largely owing to the Reliance management's grand plans for the company, as well as the fact that in FY04 the company will start on a clean slate, without the baggage of its loss making erstwhile subsidiaries. We will have to wait and see how this pans out before we make a call on the stock.

     

     

    Equitymaster requests your view! Post a comment on "BSES: Tearful FY03". Click here!

      
     

    More Views on News

    NTPC: Higher Tax Provision Impacts Profits (Quarterly Results Update - Detailed)

    Mar 30, 2017

    NTPC declared results for the quarter ended December 2016. The company reported revenue growth of 10.9% while profits declined by 7.5% YoY.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    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: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    RELIANCE INFRA SHARE PRICE


    Aug 17, 2017 (Close)

    TRACK RELIANCE INFRA

    • Track your investment in RELIANCE INFRA with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MORE ON RELIANCE INFRA

    RELIANCE INFRA - NHPC LTD COMPARISON

    Compare Company With Charts

    COMPARE RELIANCE INFRA WITH

    MARKET STATS