Hold BHEL; target of Rs 121: Axis Securities

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Axis Securities's research report on BHELBHEL’s Q3FY16 disappointed with EBITDA loss of Rs16.4bn due to negative operating leverage (revenue down 14% YoY), higher material costs (65% of sales vs. 54% YoY) and higher provisions for slow moving projects from domestic private sector.Order inflow was Rs61bn (down 9% YoY). However, combined with two large orders received post Q3, company has booked total order inflow of Rs 350 bn year to date (vs. 310 bn in FY15).In the power segment, BHEL is L1 in ~9 GW of domestic orders and expects finalization of ~2.1 GW worth of orders in Q4 in addition to9.9 GW it has booked so far in FY16 (7 GW in FY15). Management expects reduction in slow moving orders from current Rs 326bn (total order book of Rs 1.1 trn) post SEB reforms.For all recommendations, click here 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.

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