Way2Wealth has maintained neutral rating on Bharat Heavy Electricals (BHEL) in its January 31, 2012 research report.
"BHEL's 3QFY12 revenues of Rs.105bn (+19% YoY) were in line with our estimates of Rs.108bn. The Power equipment segment, which accounts for a chunk of revenues (~79%), registered a growth of 58%, while the industrial equipment business (~21%),degrew by 37%. Inflation in input costs and other operating costs rose by 28% and 65% respectively. Other expenditure rose on account of higher transportation costs, which rose by Rs.1.4bn yoy due to the despatch of higher rating sets. Additionally, higher provisioning for liquated damages and contractual obligations by ~Rs.1.6bn also took a toll on operational profitability. Consequently, EBIDTA was flat @Rs.20.8bn yoy. A higher component of other income and lower tax provisioning resulted in BHEL recording a PAT growth of 2% yoy @Rs.14.3bn."
"With clouds surrounding the Power sector & no clear visibility of orders, at its CMP of Rs.245 we give a 'NEUTRAL' rating for BHEL," says Way2Wealth research report.
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