Engineering behemoth, Bharat Heavy Electricals Limited (Bhel) has posted an 11% YoY dip in 2QFY03 net sales. A dip in the operating margins and higher tax provisions for the quarter resulted in a 26% dip in bottomline. This performance is however better than its 1QFY03 performance where it declared a net loss of Rs 489 m. Also, on a half yearly basis, the picture looks very positive.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy) (m)
Diluted Earnings per share*
On a half yearly basis, Bhel has reported a 7% dip in topline, but has finished 1HFY03 with over 180% growth in bottomline. This improvement shows because in June quarter last year Bhel recorded a net loss of Rs 1.3 bn. Historically, Bhel's performance has been volatile quarter to quarter due to the inherent nature of its business. At the end of the September quarter the company's orderbook stood at Rs 135 bn. So in all likelihood, Bhel is set for a good FY03 and FY04 going forward.
Deffered revenue expenditure
As per Bhel's release, 'the topline performance in September quarter was affected to a large extent by non-receipt, delayed receipt, cancellation of orders, delay in customer clearances for dispatches, export dispatches not reaching the port in time etc. Two export shipments (of sale value of Rs 840 m) which had been dispatched from the manufacturing centers to the ports, could not be shipped before 30th September '02 (they have since been shipped). These have been shown as finished goods in the quarterly results and do not form part of sales. This has affected the bottomline of the quarter, which otherwise has shown marked improvement in other operational parameters'.
The power industry contributed 66% to Bhel's topline in 1HFY03. The EBIT from the sector was a healthy 23%. However, the EBIT from other industries only 3% in 1HFY03 reflecting the difficult economic environment.
% of sales
% of sales
Total gross revenues
EBIT as % of power sales
EBIT as % of industry sales
The stock trades at Rs 160, a P/E of 6.9x our FY03 expected earnings. While earnings volatility is a concern, we expect Bhel to record better growth in the coming quarters.
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.
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: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407