BHEL’s PAT Drops 49.5% In June Quarter

The sluggishness in the capital goods segment is wreaking more havoc with each passing day. The first casualty was L&T, which fared pathetically during Q1 of FY14. Now, public sector major Bharat Heavy Electricals (BHEL) has posted disturbing numbers for the quarter.

What adds to the concerns this time around is that the company’s the bottomline as well as topline nosedived in comparison with that in the corresponding period in FY13. In one of the worst performances in many years, the company’s net profit declined by 49.50% to Rs 465.43 crore in Q1FY14 as against Rs 920.90 crore during Q1FY13. As a result, the EPS also came crashing down to Rs 1.90 per share from Rs 3.76 per share seen during the quarter ending June 2013. The company’s income from operations has reached Rs 6671.20 crore from that of Rs 8740.93 crore during the corresponding quarter in FY13, marking a sharp slide of almost 24%.

The employee expenses of the company moved northward Rs 1474.95 crore from Rs 1395.01 crore in Q1FY13. Its finance costs also went up from Rs 5.52 crore in Q1FY13 to Rs 27.76 crore during Q1FY14, a whopping 403% spurt. The company has incurred huge investments backed by debt, but the current revenue stream is not supporting its expansion.

While announcing its yearly (FY13) numbers a few months ago, BHEL’s CMD, B P Rao, commented that the worst is over for the power sector and the orders would constantly improve ahead. But keeping the Q1 numbers in view, it doesn’t seem that any kind of respite would be coming in the near future.Another disturbing facet of the Q1 result is that the company’s operating profit has tumbled from Rs 973.80 crore during Q1FY13 to a meagre Rs 157.78 crore in this quarter, down by almost 84%. The income from other operations somewhat saved the day for the company, going up from Rs 366.27 crore during Q1FY13 to Rs 538.48 crore, a jump of 32%.

As per its earlier announcement, the company secured orders to the tune of 9627 MW during FY13, which is more than double that of 3934 MW seen in FY12. It has secured orders worth Rs 22553 crore in the power sector, the majority of it from PSUs. Also noteworthy is the fact that BHEL bagged 67% of the total orders in the domestic market.