Hold BHEL; target of Rs 220: Emkay

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Emkay Global Financial Services has recommended hold rating on Bharat Heavy Electricals (BHEL) with a target price of Rs 220, in its October 29, 2012 research report.

BHEL, 10% yoy decline in net profit meets estimates. Revenues flat at Rs106 bn, EBITDA margins +20 bps yoy. Power healthy (EBIT% at 19.7%) but Industry disappoints (Sales -31% yoy). Debt rises to Rs18 bn (Vs Rs1.2 bn in Mar’12) as working capital continues to deteriorate – increases 49% over Mar’12 to Rs165 bn (net of cash). Order inflows remain muted as expected – secures Rs32 bn (YTD 40% of target achieved). Order book declines 8% qoq to Rs 1.2 bn – led by negative currency impact. Expect BHEL to oscillate between fair value (under different valuation methodologies) of Rs200-250 per share.

Led by declining order backlog and muted demand in the industrial sector, BHEL’s net profits declined by 10% yoy, but in line with our estimates. Revenues remained stable at Rs106 bn (+1% yoy) – led by 31% yoy decline in power sector. EBITDA margins improved marginally by 20 bps yoy to 18.0% while EBITDA grew by 2% yoy to Rs19.0 bn. APAT declined by 10% yoy to Rs12.7 bn – owing to lower other income (-59% yoy to Rs1.3 bn). At 10%, decline in APAT was the sharpest ever. Adjusting for reversal in provision for leave encashment of Rs1.7 bn, drop in net profit would have been steeper at 18% yoy to Rs11.5 bn (net of tax).

While catalysts in the core power BTG segment continue to remain amiss, we believe that the extent of de-rating on the stock factors the above concern. Further, we reiterate our focus on other emerging growth drivers and catalysts. We expect BHEL to oscillate between fair value as computed under different valuation methodologies – Rs 200-250 per share. Retain Hold rating on the stock with price target of Rs 220," says Emkay Global Financial Services research report.

Quarterly Shifts by Morgan Stanley

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More