Religare's research report on BHEL
BHEL posted an above-expected Q2FY17 (revenue/PAT: +12% to Rs 66.6 bn/ Rs 1.1 bn vs. losses in year-ago period) led by (a) speedy execution and (b) a beat on operating margins on account of lower operating expenses. Order inflows declined 13% YoY to Rs 17.8 bn and BHEL closed Q2 with an order backlog of Rs 1.03trn (-8% YoY). We feel the stock is overvalued at 22x-FY19E given that it may take some time for the company to achieve respectable profitability and return ratios. Maintain SELL; Sep’17 TP Rs 90.
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