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BHEL: Divestment on the cards - Views on News from Equitymaster
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BHEL: Divestment on the cards
May 24, 2011

BHEL has announced fourth quarter results of financial year 2010-2011 (4QFY11). The company has reported 32.2% YoY growth in sales while its net profits have grown by 46.5% YoY. Here is our analysis of the results.

Performance summary
  • Sales grow by about 32.2% YoY in 4QFY11. Growth aided by a 35.8% YoY increase in the company's 'Power' segment. The 'Industry' segment too recorded a decent growth of 17.8% YoY growth during the quarter.
  • Operating margins expand by 2.8% YoY during the quarter owing to a fall in staff costs as a percentage of sales.
  • Net profits increase by a healthy 46.5% YoY during the quarter. This is mainly due to the expansion in operating margins and fall in depreciation expenses partially offset by increase in interest expenses.
  • The company declared a final dividend of Rs 17.90 per share over and above the interim dividend of Rs 13.25 paid during the year. This takes the total dividend payment of Rs 31.15 for the year (This translates into dividend yield of 1.5%).
  • The company has also proposed to undergo a split in the ratio of 5:1. Post the split, the face value will decline from Rs 10 to Rs 2 per share.
  • Government (majority shareholder) is planning to divest 5% of its stake in the company through a follow-on public offer.
  • It may be noted that the changes in accounting policy related to provision on warranty, employee benefits and depreciation boosted net sales by Rs 27.7 bn and profit before tax by Rs 9.8 bn for FY11.

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