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BHEL: Margins Dip into the Negative - Views on News from Equitymaster

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BHEL: Margins Dip into the Negative
Aug 14, 2017

BHEL has announced first quarter results for the financial year 2017-2018. The company has reported a 2% YoY dip in sales, and a 3.9% YoY rise in net profit during the period. Here is our analysis of the results.

Performance Summary
  • Net sales for the company fell 2% YoY during the quarter.
  • Operating profits slipped into the negative as costs remained higher.
  • Net profits saw a 3.9% YoY increase due to other income being significantly higher to the tune of 85% YoY.
  • The company ended the quarter with an order book of Rs 1,014 billion, a 6% YoY fall.
  • The company's board has recommended a bonus issue in the ratio of 1:2. Record date yet to be announced.

    Financial performance: A snapshot
    (Rs m) 1QFY17 1QFY18 Change
    Sales 57,212 56,070 -2.0%
    Other operating income 997 1,250 25.4%
    Expenditure 57,499 58,203 1.2%
    Operating profit (EBDITA) 710 -883 -224.3%
    Operating profit margin (%) 1.2% -1.5%  
    Other income 2,493 4,622 85.4%
    Interest 57 657 1,063.2%
    Depreciation 2,182 2,001 -8.3%
    Profit before tax 965 1,080 11.9%
    Tax 188 272 45.0%
    Profit after tax/(loss) 778 808 3.9%
    Net profit margin (%) 1.3% 1.4%  
    No. of shares   2,448  
    Basic & Diluted earnings per share (Rs)*   2.0  
    P/E ratio (x)*   62.3  
    *On a trailing 12-months basis

    Segment-wise performance
    (Rs m) 1QFY17 1QFY18 Change
    Power      
    Revenue 43,355 43,356 0.0%
    % share 76% 77%  
    PBIT margin 7.2% 10.1%  
    Industry      
    Revenue 13,857 12,714 -8.2%
    % share 24% 23%  
    PBIT margin 6.1% 6.3%  
    Gross Total*      
    Revenue 57,212 56,070 -2.0%
    PBIT margin 6.9% 9.3%  
    *Excluding inter-segment adjustments & Excise Duty
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