Stock Of The Day: BHEL Under Pressure After Q4 Earnings — Key Levels, Analyst Views
Here's all you need to know about BHEL's fourth-quarter results.
![<div class="paragraphs"><p>CNC slot-cutting machine at a BHEL Ltd. facility in Haridwar. (Photo: BHEL website)</p></div>](https://media.assettype.com/bloombergquint%2F2020-09%2F76fc5c07-d50d-46f0-bba5-f461c877482a%2FCNC_Slot_cutting_machine_at_BHEL_Ltd__facility__image_Company_website_.png?rect=0%2C26%2C502%2C282&auto=format%2Ccompress&w=200)
Shares of Bharat Heavy Electricals Ltd. slipped 5.6% on Monday after its profit fell in the fourth quarter of fiscal 2024.
Net profit of the company fell 25.6% year-on-year to Rs 490 crore during the January-March period, according to an exchange filing on Tuesday. Revenue rose 0.4% to Rs 8,260 crore during the quarter, as against Rs 8,227 crore over the same period last year.
The stock was trading 5.6% lower at Rs 310.3 apiece on the BSE, compared to a 0.15% rise in the benchmark S&P BSE Sensex at 10:10 a.m.
BHEL Q4 Result: Key Highlights (YoY)
Revenue up 0.4% to Rs 8,260 crore.
Ebitda down 30.6% to Rs 728 crore.
Margin at 8.8% versus 12.8%.
Net profit fell 25.6% to Rs 490 crore.
Key Levels To Watch
Resistance: Rs 322.5 (lifetime high)
Support: Rs 267 (two-week low)
Key Conference Call Highlights
Completed execution of 7 gigawatts of projects globally last year, sees projects in pipeline of around 10 GW
Breakup of contract assets and trade receivables:
-Contract assets: Rs 26,700 crore
-Trade Receivables: Rs 8,000 crore
Flue gas desulfurization project opportunity: approximately 130 GW tendered out in which BHEL share stands at 30%
Looking at air defence gun opportunity and making a prototype with a European Original Equipment Manufacturer.
Currently, 65% order is from power and balance is industry sector
Aims to make this a 50:50 mix going forward
Govt plans to add 88 GW by 2032 on thermal side- expecting 10-12 GW ordering will be there annually and by 2032 this ordering will be completed
Due to some provisions, EBIT margin was lower for industrial segment as it was project specific.
Order book stood at Rs 1.31 lakh crore of which around 92,000 crore orders from power sector, rest from industrial sector
Gross margins have declined due to supply chain issues and execution delay
Brokerage Views
Morgan Stanley Retains 'Equal-Weight' Rating on BHEL
Price target of Rs 220, implies a downside of 31%.
Fourth quarter revenue and margin were below both MS and street estimates
Operating cash flow was weak on higher net working capital
Expects ordering momentum to continue with policy makers' thrust on adding thermal capacity
Believes earnings visibility improving with healthy prospect pipeline
Key risk: Depleted vendor base poses risk to execution
Nuvama Retains 'Buy' on BHEL
Price target of Rs 400, implies an upside of 25.4%.
Ebitda margin fell 400 basis point to 8.8% YoY on higher provisioning
Retains 'buy' given 25GW of thermal total addressable market spread over FY25–26E versus 9.6GW in fiscal 2024.
Implies BHEL’s thermal order inflow of ~8.4GW/year at 70% market share
Old legacy projects expected to be completed by FY25 end
Estimate earnings per share CAGR of 88%+ over FY25–27E despite conservative assumptions
CLSA Maintains 'Sell' on BHEL
Price target of Rs 189, implies a downside of 41%.
Expects large thermal orders may take time to execute
FY24 gross margins fell for sixth year, management expects this to be bottom
Believes long gestation orders like Vande Bharat cannot offset continued slow orders
Retains 'sell' rating given expensive valuation with FY26E EPS of 56-time.