Tough Times Continue for BHEL as PAT nosedives by a whopping 41% in Q3FY14

Public sector turbine manufacturer BHEL seems to be in trouble owing to great slump in power sector. Company net profit slumped to a new low at Rs 695 crore during quarter ending December 2013 as against Rs 1182 crore earned during corresponding period last year, a drop of 41%. What was more disturbing was that company’s top line also fell to Rs 8462 crore by around 16% during Q3 as against Rs 10041 crore earned in previous year.

Company management is blaming slackening in power sector demand for the dismal performance. “Current situation is very worrisome as power projects remained stalled for various reasons. Due to CCI we have noticed some movement on the ground but situation will take some more quarters to improve, marked B P Rao,” CMD,  BHEL. Power equipment segment remained the biggest laggard for the company as revenue from the segment came down to Rs 7320 crore as against Rs 8303 crore earned last year. Industry segment slowdown proved double whammy for the sector. Order book position also plummeted during Q3 from Rs 1.20 lakh crore outstanding during Q2 to 1 lakh crore, showing slow pace of order inflows. Going ahead the company will also the feel pinch of liquidity crisis as lot of debt will now get stuck due to non movement in power sector.

This is around Rs 38000 crore and out of this around Rs 18000 crore is in the form of collectable debt.  During the first 2 quarter there was not a single finalisation of any power project, while company till now has received just Rs 11700 crore worth or new order. All in all it seems that situation will continue to be the same for next couple of year’s and will only see some improvement during FY 16. Company has also declared interim dividend of Rs.1.31 per share.