Margin expansion may be led by favourable operating leverage and lower legacy order. Analysts expect EBIT in power and industrial segments to be at 12 percent and 7.5 percent, respectively.
In an interview to CNBC-TV18, Chander Agarwal, MD & CEO, TCI Express spoke about the results and his outlook for the company.
Profit during January-March quarter dropped 57.3 percent to Rs 216 crore and revenue declined 2.4 percent to Rs 10,157.6 crore compared with same quarter last year.
Power revenues are expected to increase by 20 percent YoY while industrial revenues are likely to decline by 21 percent YoY.
Net Sales are expected to increase by 104.7 percent Q-o-Q (up 29.4 percent Y-o-Y) to Rs 12946.1 crore, according to Motilal Oswal. BHEL to report net profit at 1075.6 crore up 1049.8% quarter-on-quarter.
Operating profit is likely to support bottomline. EBITDA (earnings before interest, tax, depreciation and amortisation) is expected to be at Rs 72 crore against loss of Rs 1,600 crore and margin may be at 1.2 percent on yearly basis.
Management's topline guidance for FY17 of Rs 31,000 crore is achievable going by the earnings, says Rabindra Nath Nayak, Sr. Research Analyst (Power and Capital Goods), Dolat Capital Group Company.
State-run power equipment maker BHEL is expected to report profit at Rs 96 crore in July-September quarter against loss of Rs 205 crore in year-ago period, according to analysts polled by CNBC-TV18.
Analysts are cautious about its execution which may remain challenging, an over-supplied boiler, turbine and generator (BTG) market pressurising on BHEL‘s margins.
Rohit Natarajan, Analyst, Institutional Equities, at IDBI Capital Markets Services, said: BHEL might have started work on slow moving orders from projects like Ennore that the company identified earlier. This could have led to the surprise, he said, adding that it is too early to cheer as management commentary is needed to get further clarity.
Its EBITDA loss in Q1 may narrow to Rs 205 crore versus Rs 210 crore year-on-year.
A note by Macquarie Research forecasts another year of operating losses for BHEL on higher fixed costs and a muted gross margin
With the earnings season set to start, BHEL will be announcing its flash results for FY16 on April 7.
Analysts expect another weak quarter for the quarter after seeing disappointment in previous two quarters. IDBI says odds of disappointment remains strong for the quarter and a scope of disappointment is plenty.
Poor rural demand, low volume growth and lack of pricing power weighed on companies earnings last quarter. However, declining global commodity prices continued to be saving grace. Gross margins of few companies have expanded due to savings in raw material costs.
Decline in revenue may be led by weaker execution due to lower offtake by state electricity boards (SEBs) and leveraged balance sheets of independent power producers (IPPs - 2/3rd of its order book comes from the power segment).
However, Bank of America Merill Lynch (BoA ML) and JP Morgan still reiterate bearish stance.
BHEL‘s reported performance is likely to remain constrained, impacted by muted execution. Sales growth may be impacted by ongoing execution issues for about 2/3rd of its order book from the power segment.
Amid generally weak sales performance, sectors that are likely be stronger are IT (14 percent), pharma (12 percent), media & entertainment (12 percent) and retail (10 percent), says Emkay.
Weak commodity prices, delayed capex recovery and soft rural demand are the key factors that will weigh on June quarter corporate earnings, says CRISIL Research.
In an interview to CNBC-TV18, Niraj Dalal, founding partner, 3A Capital Advisors says a lot of Nifty companies reported poor Q4 earnings and therefore, the market is currently factoring in a very pessimistic scenario for a couple of those stocks.
In an interview to CNBC-TV18, independent market expert Hemindra Hazari, says an investor should not focus on margin expansion as it is impacted by fall in commodity prices.
In an interview to CNBC-TV18, Kunal Sheth of Prabhdas Lilladhar shares his views on BHEL‘s Q4 numbers.
Bharat Heavy Electricals (BHEL) will announce its fourth quarter earnings (on Tuesday), which are expected to be weak as its provisional numbers already indicated the same. Profit after tax is seen falling 57.5 percent year-on-year to Rs 783 crore during January-March quarter due to slowdown in execution.
JP Morgan is underweight on BHEL, cutting target price by 25 percent at Rs 200. The brokerage has also reduced its FY15 and FY16 EPS estimates by 27 percent and 13 percent respectively on the back of severe execution challenges and possibility of deferral of order prospects. It states that either BHEL‘s order book is slow moving or non-moving.