BHEL Q1 PAT may dip 43% at Rs 528 cr: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal has come out with its first quarter (April-June) earnings estimates for the capital goods sector. The brokerage house expects Bharat Heavy Electricals (BHEL) to report a 83.4 percent degrowth quarter-on-quarter (degrowth of 42.6 percent year-on-year) in net profit at Rs 528.43 crore.

Revenues are expected to decrease by 59.9 percent Q-o-Q (down 9.3 percent Y-o-Y) to Rs 7552.2 crore, according to Motilal Oswal.

Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to fall by 80 percent Q-o-Q (down 22.5 percent Y-o-Y) to Rs 932.2 crore.

Motilal Oswal report on Bharat Heavy Electricals

We expect the pace of decline in revenues to sharpen sequentially, with depleting order book. We expect 9% YoY revenue decline in 1QFY14. Sharp decline in Industrial orders would also have a negative impact on revenues during the quarter. Execution of projects is also likely to be constrained, particularly in private sector orders.

We expect BHEL to report order awards of just INR25b-30b in 1QFY14, as no major project has been announced during the quarter. Ordering environment is likely to remain constrained, given unresolved issues in the Power sector.

EBITDA margin would be impacted by negative operating leverage. We estimate 210bp YoY contraction in EBITDA margin for 1QFY14.

BHEL is likely to face continued pressure on working capital (increased to 127 days from 84 days at the end of FY12) due to falling customer advances and tightening liquidity conditions. Execution has been slowed down in projects where customers are delaying payments.