MOSL: BHEL (Upgrade to Neutral)-Op. performance exceeds expectations-gross margin surprises positively
BHEL: Op. performance exceeds expectations; gross margin surprises positively
(BHEL IN, Mkt Cap USD3.6b, CMP INR73, TP INR74, 2% Upside, Neutral)
- Sales grew 1.5% YoY to INR103b (our estimate: INR110b) in 4QFY19. Gross margin shrank 620bp YoY to 43.3% (our estimate: 41%). EBITDA stood at INR14b, which included a forex loss of INR850m. Adjusting for this, EBIDTA was at INR14.8b, ahead of our estimate of INR10.0b. Adj. EBIDTA margin stood at 14.4%, above our estimate of 9.1%. Depreciation was down 38% at INR1.3b v/s INR2.2b in 4QFY18 on account of revision in useful life of assets. PAT grew 49.3% YoY to INR6.8b, above our estimate of INR5.8b. For FY19, sales/EBITDA/PAT grew 5%/11%/51% YoY.
- Segmental margins improve sharply: Power sales (82% of sales) declined 2.5% YoY to INR81b, while Industrial sales (18% to sales) grew by a healthy 14% YoY to INR17b. Margins improved 5.2pp YoY to 16.1% in Power and 10.9pp to 15% in Industrial (given a favorable revenue mix). For FY19, Power margin was stable at 12%, while industrial margin was up 300bp YoY to 7%.
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.
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