BSES: Power woes! - Views on News from Equitymaster

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

  • MyStocks

MEMBER'S LOGINX

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

BSES: Power woes!

Jun 28, 2001

BSES Limited has declared a marginal 4.7% growth YoY in the FY01 bottomline despite a 15% jump in its overall turnover. A 43% jump in cost of electrical energy purchased to Rs 10 bn was largely responsible for the sluggish bottomline growth. BSES buys almost half of its electricity requirement from Tata Power Company, which has seen its fuel costs escalate by 44% in FY01. Tata Power's cost of electricity production has gone up and consequently, the cost of power purchased by BSES has also gone up, in a vicious cycle.

(Rs m)4QFY004QFY01ChangeFY00FY01Change
Sale of electrical energy4,9214,849-1.5%19,47921,58410.8%
EPC, Contracts, Computer Service Income7041,697141.2%3,9065,28935.4%
Total turnover5,6256,54616.4%23,38526,87314.9%
Other Income323176-45.4%912758-16.9%
Total expenditure4,1275,21126.3%17,55121,60523.1%
Operating Profit (EBDIT)1,4981,335-10.9%5,8345,268-9.7%
Operating Profit Margin (%)26.6%20.4%24.9%19.6%
Interest27646-83.3%942553-41.3%
Depreciation41952425.2%1,8351,9687.3%
Profit before Tax 1,126941-16.4%3,9683,504-11.7%
Tax260-40-115.2%900290-67.7%
Profit after Tax/(Loss)86698113.2%3,0683,2144.7%
Net profit margin (%)15.4%15.0%13.1%12.0%
No. of Shares (eoy) (m)137.8137.8137.8137.8
Diluted earnings per share (Rs)22.323.3
Current P/e ratio8.4

The company recorded 11% growth in sale of electricity (in value terms) in FY01. It was the significant 35% jump in BSES's EPC, contracts and computer service income that saved the day. However, in achieving this growth, the direct costs associated with this division rose by nearly 31%.

Power cost blues
(Rs m)FY00FY01Change
Cost of power purchased7,03510,05442.9%
Cost of fuel4,1613,936-5.4%
Staff costs1,0391,22718.1%
Cost of materials (EPC, contracts & computer services)3,4504,52031.0%

BSES's bottomline would have shrunk even more had it not been for the taxation benefits it received, which saw taxation provisioning decline by 68%. The company's efforts to reduce its debt servicing costs also aided the company post a positive bottomline growth. BSES has declared a dividend of Rs 4 per share for the year FY01.

The company's ambitious Saphale project in Maharashtra has made no headaway and therefore hinders BSES's future growth from sale of electricity. Given BSES dependence on Tata Power for its electricity requirements it has no real control over those costs.

Added to these, in the dispute of standby charges by the Maharashtra Electricity Regulatory Commission, BSES has deposited an adhoc sum of Rs 540 m on an annualised basis. The concern is that the company has not acknowledged this liability and has made no provisions towards it. One must remember that the decision in this dispute may not be in favour of BSES. The liability, if it arises would erode some value from its balance sheet.

At the current price of Rs 195 the stock trades at a P/E multiple of 8.4 times its FY01 earnings. BSES's results were in line with our projections. We had estimated a turnover growth of 14.5% as against the 14.9% growth achieved by BSES in FY01. In terms of net profit, our projections were little conservative at Rs 3,073 m as against Rs 3,214 m actually achieved.

Equitymaster requests your view! Post a comment on "BSES: Power woes!". Click here!

  

More Views on News

RELIANCE INFRA 2020-21 Annual Report Analysis (Annual Result Update)

Nov 3, 2021 | Updated on Nov 3, 2021

Here's an analysis of the annual report of RELIANCE INFRA for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of RELIANCE INFRA. Also includes updates on the valuation of RELIANCE INFRA.

Will the Revival Plan of JSW Energy's Renewable Business Boost its Presence in India? (Views On News)

Nov 26, 2021

How will this move help the company in building and streamlining its renewables portfolio.

There's a New Kid on the Green Hydrogen Block (Views On News)

Nov 17, 2021

Billionaire Gautam Adani has announced plans to invest up to US$70 bn in renewable energy and produce the cheapest hydrogen in the world.

Solar's Hot in India. It's About to Get Hotter... (Views On News)

Nov 1, 2021

Will this company help India to become the largest player in solar space?

The Reason Behind the Thrilling Performance of IEX in the Last few Sessions (Views On News)

Oct 22, 2021

IEX share price has been on a roll recently. The company's shares surged over 165% in the last six months.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

How to Hit Rs 100 Crore Wealth in Your Lifetime (Equitymaster Wealth)

Nov 15, 2021

This is how you can achieve the ambitious goal of a net worth of Rs 100 crore.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

RELIANCE INFRA SHARE PRICE


Nov 26, 2021 (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 - PTC INDIA COMPARISON

COMPARE RELIANCE INFRA WITH

MARKET STATS