BHEL Shares Ease Nearly 5% As Q4 Earnings Leave Analysts Wanting

Shares of Bharat Heavy Electricals Ltd (BHEL) were tumbling on Wednesday after the state-run power equipment manufacturer posted lacklustre earnings in the March quarter, missing market expectations.

What Happened: In the quarter ended March 31, BHEL reported a consolidated net profit of ₹489.62 crore, down 25.6% year on year due to an uptick in expenses. In comparison, the company had reported a profit of ₹658.02 crore in the same period last year.

Revenue from operations for the March 2024 quarter rose marginally by 0.4% to ₹8,260.25 crore from ₹8,227.99 crore a year ago. However, EBITDA dropped 22.65% to ₹892.78 crore, down from ₹1,160.60 crore in the same period last year.

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BHEL, which accounts for just over half of India's total installed power generation capacity, also recommended a dividend of ₹0.25 per equity share for the financial year 2024, subject to shareholder and regulatory approval.

Analysts Unsatisfied: Analysts, however, were not impressed with BHEL’s Q4 performance. analysts at Prabhudas Lilladher noted that standalone revenue remained flat year-on-year as growth in the Industry segment was offset by a decline in the power segment.

The brokerage said profit before tax the profit number fell below estimates despite higher other income and a lower effective tax rate.

Kotak Securities maintained its “sell” rating for the stock raising the fair value price target to ₹75. The domestic brokerage firm said that the heavy equipment maker’s results were weak on execution and working capital, making it a net debt company. The analysts added that the company’s revenue and EBITDA missed its “modest expectations” by 18% and 13%.

CLSA gave a “sell” call on the stock with a target price of ₹189, saying that it was another weak quarter operationally In Q4.

Morgan Stanley gave the stock an “equal-weight” call and a target price of ₹220, zeroing in on the fact that operating cash flow was weak on higher net working capital.

Nuvama retained a “buy” call on the stock with a target price of ₹400 as the brokerage said that while higher provisioning hit profitability in Q4, the pipeline looks stronger.

Price Action: BHEL’s share price shed 4.7% to trade at ₹304.30 near the start of trade on Wednesday.

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