2026-03-23 13:28:48
Latest Post
Kiaasa Retail Ltd opens 4 retail outlets
NIS Facility Management Services Ltd receives order worth Rs. 56.01 lakhs
IndiQube Signs 1140 Seats Workspace Leasing Deal with Major GCC Client in Pune
Thomas Cook India Ltd announces the demerger of its Resorts and Resort Management business into Sterling Holiday Resorts Ltd
Vikram Solar appoints Sameer Nagpal as CEO to Lead Next Phase of Strategic Growth
Research
BHEL - Performance to remain subdued going ahead... - ICICIdirect
Posted On : 2012-08-30 20:10:57( TIMEZONE : IST )
Being the biggest player in the power generation equipment industry, Bhel has been the worst affected owing to the ongoing crisis in the power sector. As a result, inflows have declined 61% YoY in FY12 and visibility of growth expectations on revenue and PAT performance over FY13E-14E have diminished to such an extent that the stock price is down 39% YoY.
- Achieving Rs.60000 crore orders in FY13E looks unrealistic Order inflows in Q1FY13 totalled Rs.5590 crore, thereby forming 9% of the overall inflow guidance for FY13E. The management expects 10-15 GW of ordering in FY13E in the BTG and EPC space, which seems difficult given the current challenging macro environment. Also, the guidance of Rs.60000 crore of inflows looks unrealistic as of today given the visibility on ordering pipeline looks sedate amid high competition. Bhel has to maintain a quarterly run rate of inflows of Rs.18000 crore/quarter for the rest of FY13E to achieve its guidance.
- Revenues to decline ~5% YoY in FY13E despite on track execution On order inflows, we expect inflows to grow 34% & 40% YoY in FY13E & FY14E, respectively. However, coming from a low base, order inflows in FY13E, FY14E would not be sufficient for a 5% and 4% decline in revenues for FY13E and FY14E, respectively, since order inflows declined 61% in FY12. Even focus on EPC contracts and pricing pressure in the industry would pressurise margins. This will not be visible in the medium term as the backlog consists of BTG orders bagged over FY09-11.
Valuations take a knock but triggers for re-rating missing
Valuation multiples for Bhel have reached record lows. However, given the rising uncertainty on reforms in the power sector, predicting order inflows and decline in financial performance of Bhel has led to acute disinterest among investors. Going ahead, the stock may oscillate in +/- 10% range until some reforms/visibility emerges in the power sector. We recommend a HOLD rating on the stock with a target price of Rs.205.
