BGR Energy Systems Q3FY14 PAT Declines By 19% On YoY Basis

The company has posted a revenue growth of around 4% YoY to Rs 835.79 crore in the Q3FY14 compared to the same quarter of the previous year. The total revenue of the company comprises income from capital goods segment and income from construction and EPC contracts. The income from construction and EPC contracts segment in this quarter has contributed around 94 % YoY to Rs 788.76 crore of the total revenue, registering a growth of around 6 % in this quarter compared to the previous year. 

The total expenses of the company in this quarter has increased by around 6 % on yearly basis to Rs 738.98 crore compared to the same period of the previous year. While on quarterly basis it has increased marginally by 1 %. The increase in total expenses can be attributed to the increase in expense on raw materials. The raw materials which comprises more than 87 % of the total expenses has increased by more than 6 % on yearly basis to Rs 643.96 crore in the Q3FY14. During this quarter the employees cost has reduced by more than 7 % to Rs 51.47 crore compared to the same quarter of the previous year. While the other expenses has reduced more than 12 % to Rs 27.27 crore compared to the same period of the previous year.

On the EBITDA front, the company has witnessed a decline of around 8 % on yearly basis to Rs 101.85 crore in the Q3FY14 compared to the same period of last year. The sharp plunge in EBITDA can be attributed to the increase in raw materials and due to reduction in revenue from the capital goods segment by around 20 % (Rs 47.03 crore in Q3FY14). The EBITDA margin in this quarter has also reduced to 12.19% in the Q3FY14 compared to 13.74% in the Q3FY13. 

The company has reported a decline of around 19 % on yearly basis in the Profit After Tax (PAT) to Rs 33.55 crore for the quarter ended December 31, 2013 compared to Rs 41.44 crore for the quarter ended December 31, 2012. The sharp plunge in PAT can be attributed to increase in total expenses and reduction in other income. The total expense also includes an expense of Rs 2.02 crore in exceptional item. The company reported loss on account of settlement of contract with mutual consent between the company and the state company for oil projects. The other income in this quarter reduced by more than 99 % to Rs 0.04 crore compared to Rs 5.45 crore in the quarter ended December 31, 2012. While the PAT margin has reduced to 4 % in the Q3FY14 compared to 5.15% in the Q3FY13.

The company has informed that they have entered into a contract for Al Nasiriya 500 MW (4*125) Gas Turbine Power Plant Project with the Ministry of Electricity, Republic of Iraq. The contract was won by BGR Energy through an International Bidding Process. The order was valued at $ 246 million.

Yesterday on BSE the stock opened at Rs 105.95 and closed at Rs 105.70. The stock is trading at a P/E of 4.68x, while on Price to Book value it is trading at 0.59x times. In the last one year stock has given a negative return of more than 53 %. The performance of this sector is wholly dependent on the performance of power sector. The power sector is going through a recession. Therefore we advise to stay away from the stock as of now.