MOSL: BHEL (Sell)-Results below expectations-bleak business outlook warrants
​BHEL: Results below expectations; bleak business outlook warrants Sell
(BHEL IN, Mkt Cap USD8.0b, CMP INR152, TP INR100, 35% Downside, Sell)
- 4QFY17 performance disappoints: Sales for the quarter were muted at INR96.9b (-2.9% YoY), meaningfully below our estimate of INR129.5b. The revenue decline was led by weak execution in Industrial segment (-21% YoY). Power segment sales grew 3% YoY to INR81.1b. EBITDA stood at INR6.5b, with the margin of 6.7% coming in below estimate of 11.1% as other expenses increased 61% YoY to INR26.6b due to wage hike of INR9.6b (INR6.7b gratuity/leave liability, and INR2.9b wage hike). PAT declined 57% YoY to INR2.1b (est. of INR10.8b). For FY17, revenue stood at INR282b (+11% YoY), EBIDTA at INR11b and PAT at INR4.9b.
- Gross margin expanded 910bp YoY and 770bp QoQ to 45.1%, led by a) better product mix, b) cost-saving measures and c) expansion of vendor base. According to management, margins would moderate in FY18 and are not sustainable at 4QFY17 levels.
- L1 in 2.6GW of orders; slow-moving orders at INR390b. BHEL is L1 in 2.6GW of orders, marking a decline from 6GW in 3QFY17, due to finalization of the Maitree project (1,320MW) and the lift irrigation project (2,610MW). Order book stands at INR1050b, of which ~37% is slow-moving. Of the slow-moving orders, BHEL expects projects worth INR180b to start moving over in the coming months.
Bharat Heavy Electricals is an integrated power plant equipment manufacturer in India engaged in the design, engineering, manufacture, construction, testing, commissioning and servicing of a wide range of products and services for the core sectors of the economy, viz. Power, Transmission, Industry, Transportation (Railway), Renewable Energy, Oil & Gas and Defense with over 180 products offerings to meet the needs of these sectors. Co. operates through Power and Industry segments.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.