BHEL Disappoints With 10% Decline In Its Net Profit
DSIJ Intelligence / 30 Oct 2012
State owned electrical equipment major BHEL is seeing heavy sell off on the bourses after the company reported a very disappointing September quarter result yesterday. The Sensex participant tanked almost 7% after its result announcement on 29th Oct 2012 (Monday).
The capital goods sector in which it operates has already been showing decline in the IIP data in the current fiscal. Contrastingly largest engineering company in the country L&T in its September quarter results reported 17% rise in its revenues and 42% jump in its net profit. Order inflow for L&T for September 2012 quarter increased by 30% on YOY basis to Rs 20967 crore due to strong orders. BHEL however remains largely restricted to the power sector which is a troubled sector at the moment. Company also saw its order book shrinking by 25% to Rs 1.22 Lakh crore. Order inflow for BHEL has been sluggish as it received order worth Rs 400 crore citing a very competitive environment for the company.
The 10% decline in the Net Profit is quite worrying. Other income which stood at Rs 317.43 crore in the September 2011 quarter, declined by 59% to Rs 130.67 crore in September 2012 quarter. The only positive that has come in the result is the improvement of 21 basis points in its EBITDA margins.
Its finance cost also increased sharply from Rs 9.6 crore in September 2011 quarter to Rs 25.86 crore in September 2012 quarter. Its long term debt remains low, its short term borrowings have spiked that has caused sharp rise in the finance cost. Inventories, Trade payables and receivables however remains little unchanged from the Q2FY12 numbers.
The market is concerned about erosion of its order book which is mainly on the back of the cancellation of the orders. The domestic coal supply remains weak hence while sourcing of imported coal has shown a rise in the corporate profits. The order book going ahead too may remain under pressure. We have earlier advised readers to avoid the scrip and maintain the same after the September quarter results.
| BHEL Q2FY13 | |||
| Net Sales | 10399.62 | 10299.07 | 0.98% |
| Other operating income | 161.93 | 176.25 | -8.12% |
| Total income | 10561.55 | 10475.32 | 0.82% |
| Cost of Materials | 6604.41 | 6565.82 | 0.59% |
| Change in Inventories | -471.8 | -447.85 | 5.35% |
| Employee cost | 1481.37 | 1349.14 | 9.80% |
| Other expenses | 1048.1 | 1146.58 | -8.59% |
| Total Expenses | 8662.08 | 8613.69 | 0.56% |
| EBITDA | 1899.47 | 1861.63 | 2.03% |
| EBITDA margins | 17.98% | 17.77% | 0.21% |
| Depreciation | 216.31 | 188.81 | 14.56% |
| Other Income | 130.67 | 317.43 | -58.84% |
| PBIT | 1813.83 | 1990.25 | -8.86% |
| Finance cost | 25.86 | 9.64 | 168.26% |
| PBT | 1787.97 | 1980.61 | -9.73% |
| Tax expenses | 513.52 | 568.58 | -9.68% |
| Net profit | 1274.45 | 1412.03 | -10% |
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