State-owned engineering company Bharat Heavy Electricals (BHEL) is going to declare its results for the quarter of financial year 2012-13 on Friday. Analysts on an average expect decline in earnings to continue in the quarter amidst a falling order backlog and paucity of incremental orders.
Profit after tax is expected to go down by 4.3 percent year-on-year to Rs 1,371 crore in the December quarter, according to CNBC-TV18 poll. However, net sales are seen going up by 3 percent to Rs 10,862 crore from Rs 10,548 crore during the same period. Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to rise by 2.1 percent YoY to Rs 1,965 crore and EBITDA margin is seen improving 20 basis points YoY at 18.1 percent in October-December quarter. Analysts expect revenue momentum to remain sluggish due to the company has not bagged any new orders; the company is seeing some client side delays; delay in clearances; and muted ordering activity by utilities / power / industrial segments. According to analysts, margins have been a challenge for a number of quarters due to increased pricing pressure, aggressive bidding, increased competition and negative operating leverage. Analysts feel higher taxes this quarter could lead to a further fall in profits. Order book stood at Rs 1.22 lakh crore as on September 2012. The company won only one project during the quarter from Orissa state project worth Rs 3,800 crore. Analysts feel the company faces the challenge of downward revision to order inflow. They expect order inflows of Rs 8,600 crore (excluding NTPC bulk tender inflows, which got delayed in third quarter). Investors should watch out for outlook on order inflows and profitable execution of order backlog. The research firm CLSA in its report dated January 16, 2013 said they expected BHEL’s third quarter revenue growth to stay muted (3 percent YoY), as it delayed execution on projects due to payment delays or other issues. "In FY14-15, we expect 7-8 percent revenue decline (order backlog is already down 30 percent from the FY11 peak) and operating de-leverage to kick in. We expect 6.4 percentage point margin decline by FY15. Prospects for FY16 are uncertain and not very rosy. We recommends sell," CLSA added. Also Read - Bharti Q3: Analysts expects profit to grow 3% at Rs 745crDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
