BHEL plunges 18%, weighed down by March quarter numbers
15/06/2021
NEW DELHI, jun 14: BHEL shares on Monday slipped 18 per cent to Rs.62.55 on BSE in intra-day trade after the state-owned company reported a lower-than-expected set of numbers for the quarter ended March 2021 (Q4FY21).
BHEL shares were trading 10.5 per cent lower at Rs.68.20 at 11:32am on BSE and 10.37 per cent down at Rs.68.30 on NSE at 11:34am. BHEL's consolidated net loss narrowed to Rs.1,036.32 crore in the March 2021 quarter, mainly on the back of higher revenues. The company's consolidated net loss stood at ?1,532.18 crore in the quarter ended on March 31, 2020, according to a BSE filing.
Total income during January-March 2021 rose to Rs.7,245.16 crore, from Rs.5,166.64 crore in the year-ago period. In the full financial year 2020-21, BHEL's consolidated net loss widened to Rs.2,699.70 crore as compared with Rs.1,468.35 crore in 2019-20.
The company's total income during 2020-21 dropped to Rs.17,657.11 crore, from Rs.22,027.44 crore in 2019-20.
Most brokerage firms maintained a sell rating on BHEL as the shares fell in the markets.
"With rising preference for renewable energy generation, we are structurally negative on thermal power capacity addition in India. BHEL’s share price has doubled year-to-date and the stock is currently trading at 24x FY23 EPS," analysts at Nirmal Bang Securities Ltd said in a report, according to Live Mint.
"We believe such sharp re-rating in the last six months is unwarranted amid muted ordering prospects," it added.
“Overall, Q4FY21 appears to be muted as operating losses further widened despite some rebound in execution amid a low base. However, recent execution headwinds in power segment due to various issues leading to project delays and working capital stress continues to major near term challenges and needs to be resolved quickly to regain profitability amid pandemic,” ICICI Securities said in a note.
The brokerage firm, however, said that BHEL has initiated stringent measures on the cost control front to improve operational performance, working capital situation and focusing on new growth opportunities in oil and gas, transportation defence and aerospace for utilising manufacturing facilities and to achieve diversification.
"BHEL continues to struggle with a weak ordering environment in the power sector, high receivables (around ?31,300 crore), and huge FY21 employee cost (around 31 per cent of sales). In FY21, working capital stood elevated 101 per cent of sales (99 per cent/63 per cent of sales FY20/FY19), weighed by a higher inventory and receivables and poor execution," Motilal Oswal Financial Services said in a result update.
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