BHEL Q1 results: Net loss widens to Rs 211 crore, revenue rises 10%

BHEL Q1 results declared

Bharat Heavy Electricals Ltd (BHEL) on July 31 said that its net loss for the quarter ended 30 June, 2024 widened to Rs 211 crore from Rs 205 crore.

The company's losses widened despite a rise in its topline and a rise in demand for power equipment due to India's rising electricity generation.

The country's electricity demand hit record highs in the April-June quarter. India met a record maximum power demand of 250 GW on May 30, led by a combined impact of weather-related loads and growing industrial and residential power consumption in these areas.

Revenue from operations increased 9.6 percent to Rs 5,845 crore in the June quarter from Rs 5,003 crore in the same quarter last fiscal.

The company restated figures from the previous year to reflect adjusted expenses of Rs 2330 crore, which included deferred tax and provisions and write-offs, according to an exchange filing.

BHEL's expenses, which have hurt its earnings in the past four quarters, increased 9 percent to Rs 5875 crore, driven by a 9.4 percent rise in the cost of materials and services.

The company's management on May 21, 2024 had said that it had won a number of order in 2021-22 and 2022-23 without raw material pass-through variation clauses which has led to its operating margins contracting.

As of April 1, BHEL had an outstanding orderbook of around Rs 1,31,600 crores.

Out of the total orderbook power sector orders made up Rs. 92,559 crores, and out of these Rs 92,000 Crore Rs 52,000 crore orders are received 2023-24, the BHEL's management had said.

Transformer makers in India have been struggling to increase production due to several issues such as global supply chain hiccups, copper volatility, and raw material shortages.

Electrical steel and copper are two crucial raw materials in a power transformer. Bushings, transformer oil, and insulation are other materials used.

According to a recent report by Wood Mackenzie, the lead time for procuring transformers has steadily risen over the past two years, ranging from 120 to 210 weeks globally.

Transformer prices have risen 60 percent to 80 percent on average since January 2020, driven by higher copper prices, which have increased more than 40 percent over the same period.

Transformer makers have in the past few months called for government intervention to ease import policies for key raw materials that are in shortage in India.

Indian transformer industries are operating at only 60 percent to 70 percent of their capacity.

Furthermore, according to transformer companies, meeting short circuit criteria, as outlined by the Central Electricity Authority of India’s (CEA) guidelines, presents a challenge due to the diverse range of ratings and voltage classes selected by developers to optimize the overall costs.

They added that although CEA has expanded its guidelines to accommodate these requirements, many solar developers insist on strict compliance, reducing the pool of available suppliers and exacerbating demand and lead times.

BHEL's revenue from its industrials business, which is its second-biggest segment, reported a 30 percent surge during the period.

Shares of BHEL on July 31 were trading 0.20 percent to Rs 316.70 apiece on BSE.