State-run capital goods company BHEL will announce its third quarter (October-December) earnings today. According to CNBC-TV18 poll, analysts expect weak numbers from the company with profit after tax falling 45.5 percent year-on-year to Rs 644 crore.
Net sales may slip 12.5 percent to Rs 8,790 crore compared to same quarter last year on account of on the back of depleting order book.
In April-September period of current financial year, revenues declined 19 percent Y-o-Y due to low order backlog and also on non-delivery due to non-payment by the developers.
Operating profit or earnings before interest, tax, depreciation and amortisation (including other operating income) is expected to decline 50.8 percent to Rs 804 crore in the quarter gone by.
Operating profit margin may drop 680 basis points on yearly basis to 9.2 percent on account of lower operating leverage due to slower pace of project execution.
Contracting revenue and lower margin will lead to adjusted PAT contraction by 45 percent Y-o-Y, analysts say.
Order inflows / order backlog
Analysts feel BHEL may report a strong growth in order inflows as it has announced Rs 4,890 crore (versus Rs 1,900 crore in Q3FY13) of delayed orders from Neyveli Lignite (Rs 3,590 crore) and NTPC (Rs 1,300 crore).
Order inflow for April-September period of FY14 was at Rs 4,470 crore, down 49 percent year-on-year as ordering activity continued to be dormant.
For BHEL, analysts said the reducing order inflows and stalled projects by clients have been the biggest concern for the past 18 months.
Even increasing debtors is also the problem for BHEL. In Q2FY14, there were debtors of Rs 40,000 crore, including retention money of Rs 22,000 crore.
Recent media reports suggested that BHEL has sent legal notices to recover Rs 17,000 crore of its dues. Hence, the management comment on the same will be important to watch out for.
Other important factors to watch out for will be receivable cycle and order intake.
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