Sell BHEL - Insufficient inflows, weakness in revenue and margin trajectory to continue - Kotak

BHEL's 4QFY14 flash results reflect deteriorating metrics on (1) revenues (down 22% yoy versus 18% yoy decline in 9MFY14) and (2) EBITDA margin (down ~700 bps yoy versus 600 bps decline in 3QFY14). Slightly better order inflows were driven by industrial and spare; power down 25% yoy in FY2014. Reiterate SELL on (1) sedate ordering activity amid strong competition, (2) downside risk from revenue and margin trajectory and (3) impending (Jan 1, 2017) pay commission-related large fixed cost escalation.

Source : Equity Bulls

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