State-run power equipment maker BHEL is likely to disappoint analysts with third quarter earnings on Thursday. Profit is seen falling 57 percent year-on-year to Rs 91 crore but revenue is likely to increase 1 percent to Rs 6,248 crore in Q3, according to analysts polled by CNBC-TV18.
Operating profit may drop 73 percent year-on-year to Rs 79 crore and margin may contract 343 basis points to 1.3 percent in December quarter due to lower gross margin because of higher imported content under joint-deed undertaking.
Analysts expect another weak quarter for the quarter after seeing disappointment in previous two quarters. IDBI says odds of disappointment remains strong for the quarter and a scope of disappointment is plenty.
Key problems, which have been impacting company's performance, are low new orders, largest order worth Rs 18,000 crore (Yadadri project) stuck for environmental clearances, pricing pressure, margin declining, delay in execution due to various roadblocks and high valuations.
Analysts say there are execution issues for about two-thirds of its order book from the power sector.
BHEL announced orders worth Rs 4,614 crore during the quarter. Analysts expect order inflow around Rs 5,000 crore in Q3 against Rs 6,641 crore in Q3FY15 and Rs 1,935 crore in Q2FY16. Orderbook at the end of December 2015 may be at Rs 1,11,800 crore against Rs 1,03,900 crore in Q3FY15 and Rs 1,12,300 crore in Q2FY16.
Key things to watch out for would be order inflow and employee cost.
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