Hold BHEL; target of Rs 220: Emkay

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26 Aug, 2025 12:21

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Emkay Global Financial Services has recommended hold rating on BHEL with a target of Rs 220, in its April 8, 2013 research report.

• FY13 provisional PAT ahead estimate by 5 percent, led by lower tax incidence. Highlights (1) Sales Rs500 bn +1 percent (2) PBT Rs92 bn -11 percent (3) PAT Rs65 bn -8 percent. Implied Q4FY13 beat at 10 percent
• Positive surprise - Exceeds targets on order inflows. secures orders worth Rs315 bn (+43 percent). Order book at Rs1152 bn (-14 percent yoy and +1 percent qoq)
• Revenues from spares & services grew by 9 percent to Rs30.2 bn. Bhel commissioned 10.3 GW in FY13 (+12 percent) - total capacity commissioned by Bhel increases to 115 GW (+7 percent)
• Retain earnings estimates. 25 percent stock price correction in past one month factors all negatives. Retain Hold rating with price target of Rs220

Flash FY13 results - Net profit beats expectations by 5 percent- Bhel FY13 provisional (flash) results were ahead estimates at the net profit level by 5 percent. Key headline numbers are (1) gross revenue growth at 1 percent to Rs500 bn Vs estimate of Rs489 bn (2) Profit before tax declined by 11 percent to Rs92.3 bn Vs estimate of Rs90.5 bn (3) Net profit decline of 8 percent to Rs64.8 bn Vs estimate of Rs61.9 bn. Driven by lower tax incidence; Prima facie no case for positive operational surprise- While the net profit beat is robust at 5 percent, it is largely driven by lower tax incidence at 30 percent Vs expectation of 32 percent (FY12 tax rate also at 32 percent). Prima facie, we believe there is low probability for positive surprises at the operational level. Though, we will await proportion of contribution of other income to profit before tax (we have factored decline 10 percent decline in other income) - key determinant for quality of net profit.
 
Secures orders worth Rs315 bn; Exceeds target - Key highlight- Bhel surpassed consensus and Emkay estimates by securing order inflows of Rs315 bn - this represents growth of 43 percent and is higher than Emkay estimate of Rs268 bn by 18 percent. Higher than expected order inflow was attributed to finalization of key orders like 2x660 MW EPC Suratgarh, Rajasthan, 1x500 MW SG & TG NTPC Vindhyachal and 2x800 MW SG & TG NTPC Gadarwara. Orders from transformers, switchgears and reactors grew by 32 percent. Order inflow composition is Power (Rs22.6 bn or 72 percent), Spares & Services (Rs2.9 bn or 9 percent), Industry (Rs4.1 bn or 13 percent) and Exports (Rs2.0 bnor 6 percent). Order book declined 14 percent yoy to Rs1151.8 bn (up 1 percent qoq).
 
Retain Hold rating with price target of Rs220- Reiterate that catalysts in the core power BTG segment remain amiss. Post 25 percent correction in past one month, the stock's current valuations adequately factors above concerns. We expect BHEL to oscillate between fair value as computed under different valuation methodologies - Rs200-250 per share. Retain Hold rating on the stock with price target of Rs220.

Institutional holding more than 40% in Indian cos

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