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BHEL: Subdued quarter

May 23, 2013

Bharat Heavy Electricals Ltd (BHEL) has announced fourth quarter and annual results for the financial year 2012-2013 (FY13). The company has reported 2.2% YoY decline in sales. Profit after tax and before exceptional items has dropped by 4.2% YoY. Here is our analysis of the results.

Performance summary
  • Sales (including other operating income) declined by 2.2% YoY in 4QFY13.
  • Revenues from both power and industry segment decline 0.2% YoY and 7.2% YoY respectively. Sales for FY13 grew by just 1.1%. Power revenue grew by 4.8% YoY; while Industry revenue de grew by 9.1%.
  • Operating profits declined by 6.4% YoY during the quarter. The company's total material cost as a percentage of sales reduced from 57.8% to 56.4% YoY. However, increase in other expenses as a percentage of sales lowered the effect of decline in material cost. As a result, operating margin declined 1.1% from 25.3% to 24.2% YoY in 4QFY13. FY13 operating profits also dropped by 4.7% YoY leading to a 1.2% decline in operating margins.
  • Net profit declined by 4.2% YoY during the quarter. Rise in interest expenses (up 121% YoY) and decline in other income impacted the profitability. For FY13 too, Net profit declined by 5.6% YoY due to the same reasons.
  • The company declared a final dividend of Rs 3.3 per share during the quarter.

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