BHEL Records Highest Ever Topline, Lower PAT In FY13

Despite drastic negativity in the capital goods space overall, and particularly in the power sector, electrical equipment major Bharat Heavy Electricals (BHEL) has posted a decent topline in the elapsed quarter. Beating all estimates, the PSU major posted its highest ever turnover of Rs 50,015 crore during FY13 (slightly up from Rs 49,510 crore in FY12).

On the other hand, rising salary costs and finance costs have put enormous pressure on its bottomline. As per the provisional numbers, the company’s net profit for FY13 stood at Rs 6,485 crore, down almost 8% YoY from Rs 7,040 crore in FY12. In fact this is the first time since 2000-01 that the company’s PAT has declined.

Despite this sharp decline in profits, BHEL’s CMD B P Rao categorically said, “The worst for the power sector is certainly over, and we are seeing orders constantly improving. During FY13, we have secured orders worth Rs 31,528 crore, which is 42.7% more than those in the previous year.”

The bourses have reacted positively to the provisional numbers and the stock closed at Rs 182, up 2.62% in the closing trade (April 8, 2013). “Though we have had a target of Rs 1 lakh crore for the 12 Five Year Plan, in the present circumstances we are certainly taking a relook at it. But now onwards, I am quite optimistic”, notes Rao.

During FY13, the company secured orders to the tune of 9627 MW that is more than double the order worth 3934 MW secured in FY12. All in all, the company now has orders worth of Rs 1,15,180 crore in hand for execution in FY14 and beyond. Its robust topline was supported by 8.9% growth in the spares and services business, generating Rs 3,022 crore.

On the other hand, the company’s cash flow has gone haywire due to default by many customers in making payments. “They owe around Rs 40,000 crore and out of this, Rs 20,000 crore is yet to be matured, but for the rest we are certainly gearing ourselves to recover”, Rao notes.

The bigger concern for the company is the pessimism in the power sector, which is the mainstay for the company. In this regard, Rao says, “During the last few years, the power sector has been witnessing a persistent slowdown and issues of coal, land and finance are adversely affecting it. In spite of this, we have secured orders worth Rs 22,553 crore in the power sector, the majority of which is from PSUs. Interestingly, BHEL bagged 67% of the total orders in the domestic market”.

Experts also feel that BHEL has managed a fairly decent performance given the situation both in and outside the country. Though the company’s EPS has declined by 8% to Rs 26.50 per share, its NAV per share touched Rs 123.86. Its export turnover was also robust at Rs 23,935 crore. Even in a bleak environment, BHEL has commissioned capacity to the tune of 10340 MW, which is 12% more than the 9270 MW secured in FY12. It has successfully neutralised Chinese competition and that from PSUs as well as other power producers. Developments like that of the CERC order for power companies, the picking up of project execution among PSUs etc. will certainly benefit BHEL in FY14.