Bharat Heavy Electricals Ltd on January 28 reported consolidated net profit of Rs 134.7 crore for the quarter ended December 31, 2024 as against net profit of Rs 60 crore in the year-ago period.
The public sector undertakings' consolidated revenue from operations rose 32.3 percent to Rs 7,277.1 crore in Q3FY25 as compared to Rs 5,504 crore in Q3FY24.
The company restated figures from the previous year to reflect adjusted expenses of Rs 5,537.47 crore from Rs 5,816.87 crore that was reported a year ago. The restated figures include deferred tax and provisions and write-offs, according to an exchange filing.
"The financials for the nine months ended December 31, 2023 have been restated in line with the change in accounting policy by the company in FY 2023-24 with respect to factoring time value or money while calculating Expected Cred it Losses in respect or Contract Assets. Impact or the adjustment for Q3 was a reduction in other expenses by Rs 279.40 crore and increase in Tax expenses by Rs. 70.32 crore," the company said as part of its financial results.
The power sector makes for about 70 percent of BHEL's operations, the other major segment being industry, which caters to major equipment supplies and engineering, procurement, and construction (EPC) works for industries including transportation, transmission, defence, aerospace, and captive power plants.
The government’s renewed focus on setting up thermal power projects and a surge in demand for coal-fuelled power generation have revived the fortunes of BHEL the country's largest power equipment manufacturer.
India's power consumption rose 3.5 percent on year to 145.4 billion units in July, 4.7 percent on year to 144.21 billion units in August and remained flat at 141.36 billion units in September.
Despite the marginal rise in India's electricity consumption seen during July-September the state-run engineering company received orders worth about Rs 52,000 crore for 9.6 gigawatts (GW) of thermal power projects in FY24, the highest ever by value for coal-based projects for the company.
BHEL's scrip on BSE ended 3.5 percent lower at Rs 187.60.
BHEL recorded strong order inflows in the first nine months of FY25, totalling over Rs 47,947 crore. Key wins include securing a contract from NTPC to establish the main plant package of three units of the 800MW Telangana Stage-II supercritical thermal power plant (STPP) project. The three units will be set up at a cost of Rs 293.44 billion.
As of YTDFY25, BHEL's had an orderbook of Rs 1,60,157 crore, with power order worth Rs 121,413 crore and industry orders worth Rs 35,063 crore.
BHEL's expenses, which have hurt its earnings in the past five quarters, increased 30.5 percent to Rs 7,224.51 crore, driven by a 21.5 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.
Transformer makers in India had struggled to increase production before 2024-25 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.
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.
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