BHEL’s Q4 Net Declines, Marginal Increase In Turnover

Due to sluggishness in the Capital Goods segment, especially in power equipments, Bharat Heavy Electricals (BHEL) has posted subdued numbers during FY13. On a quarterly basis too, the performance of the heavy machinery major declined in quarter, ending March 2013. Its income from operations has fallen to Rs 19866.77 crore in comparison to Rs 20249.47 crore during the corresponding quarter in FY12, marking a decline of 2.15%.

The company’s PAT has declined from Rs 3379.81 crore in Q4FY12 to Rs 3237.54 crore in Q4FY13, down by 4.2%. However, in spite of its lower bottomline, the company’s performance is much better than the street’s expectation. Analysts were expecting much decline in the margins owing to drastic negativity in the Capital Goods space overall, and particularly in the power sector.

On a yearly basis too, the company’s PAT took a beating. On a standalone basis, it posted a net profit of Rs 6614.73 crore compared to Rs 7039.96 crore earned during FY12, down by 6%. The topline remained sluggish for FY13 at Rs 49546.36 crore versus Rs 49244.44 crore during FY12, a slight increase of 0.6%. In fact, this is the first time since 2000-01 that the company’s PAT has declined.

On a consolidated basis, BHEL’s net profit has declined to Rs 6693.37 crore in FY13 from Rs 70874.40 crore during FY12, while its turnover has reached Rs 50044.60 crore during FY13 in comparison to Rs 49627.25 crore in FY12.
Rising salary costs and the financial burden have put enormous pressure on the company’s bottomline, with the employee benefits expenses appreciating from Rs 5465.43 crore in FY12 to Rs 5752.78 crore during FY13, a sharp rise of 5.25%. The finance cost has also risen from Rs 51.28 crore to Rs 125.27 crore in FY13, a whopping 144% up. In its board meeting, the company has recommended a final dividend of Rs 3.29 per share.

The company has also received a setback on the Other Income front, which tumbled from Rs 1265.55 crore in FY12 to Rs 1121.71 crore in FY13. In the quarter too, this went down much sharply from Rs 365.41 crore in Q4FY12 to Rs 292.39 crore, a decline of around 20%.

Despite a sharp decline in the PAT, while announcing the provisional numbers a few days ago, BHEL’s CMD B P Rao categorically commented, “The worst for the power sector is certainly over and we are seeing orders are constantly improving. During FY13, we have secured orders worth Rs 31528 crore, which is 42.7% more than that in the previous year.” Orders to the tune of 9627 MW came in during FY13, more than double that of 3934 MW in FY12. BHEL has secured orders worth Rs 22,553 crore in the power sector, and the majority of this is from PSUs. Interestingly BHEL bagged 67% of the total orders in the domestic market.