BSES Limited, one of India's best managed power companies, has declared a 23% jump in sale of electrical energy (its core business) in 2QFY01. After seeing a lull in the first quarter, the company's EPC (Engineering, Procurement and Construction), contracts and computer service division has shown a remarkable turnaround to record a 115% jump in revenues.
Sale of electrical energy
EPC, Contracts, Computer Service Income
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy) (m)
Earnings per share*
Current P/e ratio
Despite the growth in topline, its operating margins declined as a result of a huge 51% jump in its operating expenditure. A 72% surge in the cost of electrical energy purchased (Rs 3,101 m) was a major contributor to this jump in expenditure. This was because BSES was forced to buy extra power from Tata Electric at higher costs, in view of the maintenance work that was on in one unit of Dhanau. A 128% jump in cost of materials for its EPC, contracts and computers division also contributed to deflated the operating margins.
But a 17% decline in its interest outgo, and lesser tax provisioning saw the company post a 16% growth in bottomline in 1QFY01.
We had projected a 14% growth in BSES's topline and a marginal 1% growth in its bottomline for FY01. Based on its first half results in FY01, the company seems to have surpassed our expectations.
At the current price of Rs 177, the stock trades at an annualised P/e multiple of 8.3 times its FY01 earnings. The growth in the company's turnover, coupled with a turnaround in its EPC business is encouraging for BSES. The jump in cost of electrical energy seems like a one time expense. The next half of FY01, should be better than 1HFY01, provided the cost of fuel doesn't shoot up for this company.
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