X

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.
BSES: EPC volatility hits performance - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 28, 2002

    BSES: EPC volatility hits performance

    BSES, one of India's leading private utilities, has declared a 4% growth in sale of electricity in 2QFY03 (1588 MUs). In value terms, revenues from sales of electricity has gone up by over 10% YoY during the quarter. The company's income from engineering contracts and computer division have taken a hit this quarter (down 42%). This has resulted in a marginal 1% growth in the company's operating income.

    (Rs m) 2QFY02 2QFY03 Change 1HFY02 1HFY02 Change
    Sale of electrical energy 5,854 6,470 10.5% 11,689 12,666 8.4%
    Income from EPC, contracts & computer division 1,301 751 -42.3% 2,048 1,502 -26.6%
    Total operating income 7,154 7,220 0.9% 13,738 14,168 3.1%
    Other Income 204 223 9.3% 337 324 -3.8%
    Expenditure 5,920 6,178 4.4% 11,006 11,576 5.2%
    Operating Profit (EBDIT) 1,234 1,043 -15.5% 2,732 2,592 -5.1%
    Operating Profit Margin (%) 17.3% 14.4%   19.9% 18.3%  
    Interest 136 169 24.1% 300 329 9.7%
    Depreciation 527 697 32.2% 1,035 1,282 23.9%
    Profit before Tax 775 400 -48.4% 1,734 1,305 -24.7%
    Tax 44 20 -54.2% 114 78 -31.1%
    Profit after Tax/(Loss) 732 380 -48.1% 1,620 1,227 -24.3%
    Net profit margin (%) 12.5% 5.9%   13.9% 9.7%  
    No. of Shares (eoy) (m) 137.8 137.8   137.8 137.8  
    Diluted Earnings per share* 21.2 11.0   23.5 17.8  
    *(annualised)            
    Current P/e ratio   18.6     11.5  

    While operating income growth slowed down, BSES was not able to prune its operating expenses in tandem. Consequently, the company saw a 16% dip in operating profit, with operating margins shrinking to 14.4% (17.3% last year). A significant 79% jump in other expenses seems largely responsible for the escalation in operating costs. Higher interest outgo as well as depreciation provisioning weakend profitability. Consequently, BSES reported a 48% dip in net profit in September quarter 2002.

    Cost Breakup...
    (Rs m) 2QFY01 2QFY02 Change 1HFY01 1HFY02 Change
    Cost of energy purchased 3,072 3,376 9.9% 5,571 6,221 11.7%
    Cost of fuel 940 941 0.2% 2,072 2,057 -0.7%
    Cost of material & other direct
    expenses (EPC and contracts)
    1,045 611 -41.6% 1,703 1,239 -27.3%
    Tax on electricity 128 88 -31.4% 246 203 -17.3%
    Staff cost 260 310 19.2% 501 579 15.5%
    Other expenses 476 852 79.0% 914 1,278 39.9%
    Total expenditure 5,920 6,178 4.4% 11,006 11,576 5.2%

    BSES's problems continue to grow. On the one hand, the company's growth in the Mumbai circle is pegged at only 4%-5% per annum, its EPC and contracts business is too volatile for comfort. Right now, it is only earning from the Mumbai circle and its distribution ventures in Orrisa and Delhi are currently in the red. Its generation business in Kerala too is in losses. Due to non-payment of outstanding dues by Kerala State Electricity Board (KSEB), the Kerala plant has been shut down since October 2001. Also, the MERC order over stand by charges continues to hang in fire.

    Though in the long term, BSES's investments in Kerala, Orrisa and Delhi are likely to bear fruit, in the short term the paucity of returns from these investments in hitting the company's operating performance. At Rs 205 the stock currently trades at 11.5x 1HFY03 annualised earnings. The valuations are on the higher side due to the poor September quarter numbers. The results are likely to dampen valuations over the medium term.

     

     

    Equitymaster requests your view! Post a comment on "BSES: EPC volatility hits performance". Click here!

      
     

    More Views on News

    NTPC: Higher Tax Provision Impacts Profits (Quarterly Results Update - Detailed)

    Mar 30, 2017

    NTPC declared results for the quarter ended December 2016. The company reported revenue growth of 10.9% while profits declined by 7.5% YoY.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    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

    RELIANCE INFRA SHARE PRICE


    Aug 16, 2017 (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 - GUJ.IND.POW COMPARISON

    Compare Company With Charts

    COMPARE RELIANCE INFRA WITH

    MARKET STATS