Shares of Bharat Heavy Electricals were down around 1 percent to Rs 224 as analysts have retained their cautious/negative views on the stock post disappointing third quarter numbers announced Friday. The company's net profit declined 18 percent on weak order flows.
A snapshot of what analysts have to say about the stock:
Target price: Rs 205
Downside risks remain on (1) revenue growth (execution delays/shallow book) and (2) margins (contribution level on recent aggressive bids apart from negative operating leverage) in the coming quarters. While improving order pipeline (10-12 GW) and easing competition (Alstom, BGR) are positives, this may not be enough for BHEL as of now.
Target price: Rs 216
BHEL has been facing payment issues with many clients like India bulls, Visa power etc, which has prompted it to withhold project execution and delivery.
While it is unlikely to see any major boost to the order book and intake in the near term, we believe incremental news flow and governmental action in the power space could spurt valuations in the near to medium term.
Target price: Rs 215
Given lack of positive triggers, we maintain 'Hold'. Key downside risks are: 1) Execution slippages, 2) Cost overruns leading to margin disappointment.
Motilal Oswal Securities
Target price: Rs 200
We model BHEL's order intake to improve 10% year-on-year in FY13E, supported by NTPC bulk tender orders, and expect orders in FY14E/FY15E to stabilize at Rs 25-30,000 crore (v/s Rs 26700 crore in FY13), driven by new project awards from central and state sector companies. However, the key factors to watch are order cancellations and execution delays, as private sector contributes 25-30% of BHEL's order book.