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BHEL 2022-23 Annual Report Analysis

Wed, 2 Aug

BHEL has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

BHEL Income Statement Analysis

• Operating income during the year rose 8.5% on a year-on-year (YoY) basis.
• The company's operating profit was by NA YoY during the fiscal. Operating profit margins witnessed a growth and down at 9.9% in FY23 as against 12.8% in FY22.
• Depreciation charges decreased by 17.1% and finance costs increased by 36.6% YoY, respectively.
• Other income declined by 6.9% YoY.
• Net profit for the year grew by 7.3% YoY.
• Net profit margins during the year declined from 2.4% in FY22 to 2.4% in FY23.

BHEL Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	182,411	197,989	8.5%
Other income	Rs m	35,611	33,144	-6.9%
Total Revenues	Rs m	218,022	231,133	6.0%
Gross profit	Rs m	-23,284	-19,624	NA
Depreciation	Rs m	3,141	2,603	-17.1%
Interest	Rs m	4,481	6,122	36.6%
Profit before tax	Rs m	4,705	4,794	1.9%
Tax	Rs m	258	21	-92.0%
Profit after tax	Rs m	4,447	4,774	7.3%
Gross profit margin	%	-12.8	-9.9
Effective tax rate	%	5.5	0.4
Net profit margin	%	2.4	2.4

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BHEL Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 234 billion as compared to Rs 214 billion in FY22, thereby witnessing an increase of 9.2%.
• Current assets rose 8% and stood at Rs 301 billion, while fixed assets rose 4% and stood at Rs 259 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 560 billion as against Rs 528 billion during FY22, thereby witnessing a growth of 6%.

BHEL Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	265,066	268,280	1.2
Current Liabilities	Rs m	214,326	234,109	9.2
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	527,752	560,066	6.1
Current assets	Rs m	279,235	301,417	7.9
Fixed Assets	Rs m	248,517	258,649	4.1
Total Assets	Rs m	527,752	560,066	6.1

BHEL Cash Flow Statement Analysis

• BHEL's cash flow from operating activities (CFO) during FY23 stood at Rs -7 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs 15 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs 890 million, an improvement of 127% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 8 billion from the Rs -8 billion net cash flows seen during FY22.

BHEL Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	6,603	-7,415	-
Cash Flow from Investing Activities	Rs m	-11,253	14,805	-
Cash Flow from Financing Activities	Rs m	-3,295	890	-
Net Cash Flow	Rs m	-7,873	8,279	-

Current Valuations for BHEL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 1.4, an improvement from the EPS of Rs 1.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 100.4, stands at 82.9 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.3 times, while the price to sales ratio stands at 1.8 times.
• The company's price to cash flow (P/CF) ratio stood at 31.4 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	52.4	56.9
TTM Earnings per share	Rs	1.3	1.4
Diluted earnings per share	Rs	1.3	1.4
Price to Cash Flow	x	22.6	31.4
TTM P/E ratio	x	43.6	82.9
Price / Book Value ratio	x	0.8	0.9
Market Cap	Rs m	213,276	231,296
Dividends per share (Unadj.)	Rs	0.4	0.4

Ratio Analysis for BHEL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.3x during FY23, from 1.3x during FY22. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 1.8x during FY23, from 2.0x during FY22. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 1.8% during FY23, from 1.7% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 4.1% during FY23, from 3.5% during FY22. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 1.9% during FY23, from 1.7% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	1.3	1.3
Debtors’ Days	Days	6	6
Interest coverage	x	2.0	1.8
Debt to equity ratio	x	0.0	0.0
Return on assets	%	1.7	1.9
Return on equity	%	1.7	1.8
Return on capital employed	%	3.5	4.1

To see how BHEL has performed over the last 5 years, please visit here.

BHEL Share Price Performance

Over the last one year, BHEL share price has moved up from Rs 54.5 to Rs 100.4, registering a gain of Rs 45.9 or around 84.1%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 43,066.5 (down 1.8%). Over the last one year it has moved up from 30,053.1 to 43,066.5, a gain of 13,013 points (up 43.3%).

Overall, the S&P BSE SENSEX is up 13.2% over the year.

(To know more, check out historical annual results for BHEL and quarterly results for BHEL)