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.
Bhel 1QFY02: Sliding again - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 26, 2001

    Bhel 1QFY02: Sliding again

    Engineering behemoth, Bharat Heavy Electricals Limited (Bhel) has posted a net loss of Rs 1,252 m in its first quarter ended June 30, 2001 as against a net profit of Rs 20 m posted in the same period last fiscal.

    (Rs m) 1QFY01 1QFY02 Change
    Net Sales 8,542 8,881 4.0%
    Other Income 271 332 22.3%
    Expenditure 8,377 9,846 17.5%
    Operating Profit (EBDIT) 165 -966 -
    Operating Profit Margin (%) 1.9% -10.9%  
    Interest 25 200 700.0%
    Depreciation 387 418 8.0%
    Profit before Tax 25 -1,252 -
    Tax 5 0 -
    Profit after Tax/(Loss) 20 -1,252 -
    Net profit margin (%) 0.2% -14.1%  
    No. of Shares (eoy) (m) 244.8 244.8  
    Diluted Earnings per share* 0.3 -20.5  

    The company's inability to keep a tab on its expenditure seemed to have taken the wind out of the company's financials. An 11% increase in its staff costs to Rs 3,374 m and a significant 52% in deffered revenue expenditure to Rs 357 m were the primary spoilsports. A huge jump in debt servicing costs to Rs 200 m during the quarter also contributed to this dismal performance.

    The management has clarified that the first quarter performance has been affected due to change in product mix. However, they expect it to improve during the remaining period of the year, which will witness a balanced product mix. The management expects that the impact of the higher staff costs due to VRS and the DRE to get evened out over a higher quantum of production in the balance period of the year. The management also claims that based on the current status of completion of orders on hand, the outlook for the remaining year appears to be better.

    However, all said and done this dismal performance has once again put a question on the company's operations and stability. It should be remembered that Bhel had reported a huge loss of Rs 1.8 bn till the first nine months of FY01. However, in the fourth quarter it recovered smartly and reported net profits to the tune of Rs 4.8 bn. Based on its huge turnaround in 4QFY01, there was anticipation that it was a shape of things to come.

    While it is quite likely that Bhel may come back strongly in the coming quarters, as it did in 4QFY01, the instability of performance should keep a section of investors away from the stock. To be fair to Bhel, the cyclicality of the power projects makes it impossible to give a stable performance in each quarter. One also appreciates that the rise in staff cost due to VRS is good for the long term, but given Bhel's size of operations one really wonders whether the company should start thinking in lines of HLL and prune its areas of operations.

    Based on these results we will have to downgrade our estimates of Bhel going forward. The stock trades at Rs 170, a P/e of 14 times its FY01 earnings. Bhel's 1QFY02 performance is likely to put pressure on the company's valuations in the medium term.



    Equitymaster requests your view! Post a comment on "Bhel 1QFY02: Sliding again". Click here!


    More Views on News

    BHEL: Margins Dip into the Negative (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The company also saw order inflows of Rs 18 billion during the quarter, which was a massive 41% YoY lower than the previous year's quarter.

    BHEL: The Somber Performance Continues (Quarterly Results Update - Detailed)

    Jun 16, 2017

    BHEL has announced fourth quarter results for the financial year 2016-2017 which has seen its fortunes continue to decline.

    BHEL: Project Execution Up, Inflows Down (Quarterly Results Update - Detailed)

    Feb 13, 2017

    BHEL has announced third quarter results for the financial year 2016-2017. The company has reported an 18% YoY growth in sales, and a Rs 875 million net profit during the period. Here is our analysis of the results.

    Cummins Ltd: Domestic Revenues the Saving Grace (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The domestic economy continues to grow largely in areas which are positively impacted through continuing government investments in infrastructure.

    ABB: Large Orders Remain Muted (Quarterly Results Update - Detailed)

    Aug 2, 2017

    Decisions on government initiatives and private investments were stalled in anticipation of upcoming tax restructure.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    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


    Aug 23, 2017 (Close)



    Compare Company With Charts