BHEL Q2: Here's how brokerages analyse its Q2 nos

State-run capital goods company BHEL's second quarter (July-September) net profit fell 64.2 percent year-on-year to Rs 456 crore on lower revenues, supported largely by higher other income.

Net sales declined 15.2 percent to Rs 8,819 crore in three-month period ended September 2013 from Rs 10,399.62 crore in a year ago period, dented by fall in power as well as industry revenues.

Outstanding orderbook position stood at Rs 1.02 lakh crore as on September 2013, down 17 percent year-on-year and 6 percent sequentially.

On profit front

Amol Rao of Anand Rathi Institutional Equities is not really too disappointed with the Q2 performance of BHEL since the numbers were as per his expectations. He had expected net profit around Rs 400 crore level. 

According to him the company always reports weak numbers in the first and second quarter. He expects too see revival in Q3 because billing for a lot of projects will be done Q3 onward.

Rabindra Nath Nayak SBICAP Securities is disappointed with BHEL's Q2 performance. However, he expects a marginal recovery in Q3 but not a significant one.

On orderbook front

Low number on order book too was expected, since the company did not receive any orders in Q2, adds Rao. However in first week of October, orders to the tune of Rs 4500-5000 have been received by the company. Therefore, as long as the order book has not slipped below Rs 1,00,000 crore Rao is not too disappointed.

Target price

Nayak has a target price of around Rs 158 and considering the dismal performance the stock may come down to around Rs 120 or Rs 115 levels.

Whereas, Rao has a target price around Rs 199 but would not revive the target price before hearing the management. “I had a buy recommendation because we believe company of this asset size deserves a certain fair valuations. We believe 2.2 times is a fair value for the stock," adds Rao.