BHEL - Q1FY13 performance - SMC

Bharat Heavy Electricals, the PSU power equipment major has turned in an earnings growth of 13% (to Rs.920.90 crore) for the quarter ended June 2012. Sales for the period was higher by 17% (to 8439.0 crore) and facilitated by higher sales and nearly flat operating margin (up 10 bps to 14.2%) the operating profit expanded by 18% to 1202.20 crore. With depreciation being higher by 34%, the growth at net profit restricted to 13% to 920.90 crore.

The company which has reported 31%yoy fall in cash in hand to 6671.98 crore as end of March 31, 2012 has reported 7% rise in other income for the quarter ended June 2012. According to the company the other income for Q1FY13 include a translation gain of 130-140 crore as the value of USD denominated receivable have increased on the back of rupee depreciation against USD. But for this the bottom-line growth would have been muted.

Sales (net of excise and service tax) but excluding other operating income for the quarter was higher by 17% to 8326.20 crore. The value of production for the same period was higher by 18% to 9268.10 crore. Burnout of strong order book facilitates top-line expansion. Upside at sales came from both power as well as industry segment. The segment sales of industry were higher by 19% (to 1971.70 crore or 23% of sales) and that of power segment was up by 17% (to 6771.90 crore or 77% of sales). Revenue mix for the quarter stood at 77:23 with majority being power and it was largely similar compared to 78:22 in the corresponding previous period. However the upside at EBIT level was largely from power sector. Segment profit of power had the benefit of higher sales as well as expansion in margin with better project mix. Segment profit of power was higher by 27% to 1206.40 crore with its segment margin expand by 130 bps to 17.8%. On the other hand with the segment margin of industry contract by 160 bps to 21%, its segment profit was restricted to Rs 413.40 crore, a rise of 11%.

Operating margin (OPM) for the quarter at 14.2% was nearly flat. The OPM was up just 10 bps from 14.1% of corresponding previous period. Material cost which as a proportion of sales net of stocks was higher by 20 bps to 60.1% and the other expenses was up by 120 bps to 11%. But the staff cost was lower by 150 bps and this has more than compensated the rise in other cost heads leading to marginal expansion in OPM.

Other income was up by 7% to 366.30 crore. The interest cost was lower by 38% (to 5.50 crore) and depreciation was higher by 34% (to 254.10 crore). Thus the growth at PBT was restricted to 13% to 1334.60 crore. Provision for taxation was up by 13% (to 413.70 crore) in absolute terms and the tax incidence was flat at 31%. Thus gained the PAT was higher by 13% to 920.90 crore.

Other developments

Order backlog as end of June 30, 2012 stood at 132900 crore compared to 134681 crore as end of March 2012. Order intake for the quarter was 5590 crore compared to 2470 crore in corresponding previous quarter.

Source : Equity Bulls

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