BHEL : media rpts cash crunch hurting co.. Receivables at BHEL pile upto Rs
400bn in FY14 v/s 160bn 5 yrs ago as cash strapped power producers
scale back orders & defer payments
On Fri, May 24, 2013 at 3:51 PM, Rajesh Desai <[email protected]> wrote:
> *4QFY13 Results Review - ANTIQUE
> *
>
> * *
>
> *Bharat Heavy Electricals Limited - Margins beats expectations*
>
> *Revenue declined by 2% YoY in 4QFY13 to INR192bn as against our
> estimate of INR206.5bn. The revenue decline started from 3QFY13 despite
> strong order book on account of delay in project execution at customer end
> and liquidity issue remains concern for the company. However, control on
> direct material cost and employee cost surprised on margin with 24.2% vs
> estimates of 19.2%. Net profit was also boosted by lower tax of 30.8% in
> 4QFY13 as against 33.3% in 4QFY12. The order inflow growth of 43% to
> INR315bn in FY13 was driven by NTPC bulk tenders was encouraging and
> management expect to maintain inflows going ahead on back of Sate and PSU
> orders with higher EPC orders. 4QFY13 results were in line with already
> published flash results in April. We maintain HOLD.*
>
> **
>
> *Revenue impacted due to lower execution*
>
> 4QFY13 net revenue was down 2% on YoY to INR192bn, 7% below expectations
> of INR206.5bn. For FY13 revenue reported marginal growth of 0.9% to
> INR484.2bn on back of customer delay and slower execution. Revenue from
> spares business increased by 8.9% to INR30.2bn. We expect company would
> find difficult to maintain growth due to significant fall in order inflow
> compared to FY09 - FY11 and estimate decline of 3.8% to INR469bn in FY14e
> and 16.4% to INR393bn in FY15e.
>
> *Margins remained healthy during the quarter, difficult to sustain*
>
> EBIDTA declined by 5.8% to INR46.5bn in 4QFY13 as margins declined by
> 100bps on YoY to 24.2%. However margins were significantly higher than
> estimates of 19.2% despite revenue decline as company managed to control
> employee cost and direct material cost. BHEL reported PAT of INR32.3bn as
> against estimates of INR25.8bn. PAT was also boosted by lower tax rates
> during the quarter (30.8% vs. 33%) due to higher R&D spend and
> provisioning. Going ahead we expect profits to decline by 24.4% to
> INR49.7bn in FY14e and by 40.9% to INR29.3bn in FY15e.
>
> *Order inflow growth driven by NTPC bulk tender*
>
> The order inflow growth of 43% to INR315bn in FY13 was driven by NTPC bulk
> tenders. Booked orders of 9,627 MW in FY13 as compared to 3,934MW in FY12
> was boosted by 5,940MW NTPC bulk tenders. We believe that there are very
> few orders left to be booked in FY14-15. With all NTPC bulk tenders orders
> already placed, and BHEL having also booked most of expected SEB orders
> (like Rajasthan order), we expect 12% drop in order inflow to INR278.5bn in
> FY14 and expect orders of INR376.3bn in FY15e.
>
> *Valuation*
>
> At CMP of INR196, BHEL is trading at 9.7xFY14e and 16.3xFY15e and 1.4xP/BV
> of FY14e. Historically, the stock tends to trade in 1-1.5 x P/B, during
> extremely adverse industrial environment and hence a downside to the stock
> cannot be ruled out if environment doesn't improve. We maintain HOLD with
> target price of INR180 (15xFY15e).
>
>
>
> --
> CA. Rajesh Desai
>
--
CA. Rajesh Desai
--
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