Bharat Heavy Electricals Ltd., incorporated in the year 1964, is a Mid Cap company (having a market cap of Rs 20683.46 Crore) operating in Engineering sector.
Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 2966.77 Crore, down -59.05 % from last quarter Total Income of Rs 7245.16 Crore and up 42.19 % from last year same quarter Total Income of Rs 2086.43 Crore. Company reported net profit after tax of Rs -456.38 Crore in latest quarter.
Investment Rationale
BHEL continues to struggle with: a) a weak ordering environment in the Power sector, b) higher receivables (over INR300b), and c) huge FY21 employee cost (~31% of sales). In FY21, working capital stood elevated ~101% of sales (99%/63% of sales FY20/FY19), weighed by a higher inventory and receivables, and poor execution. The brokerage maintains earnings estimate (FY22E to be loss making) and the TP of INR40 (FY23E EV/EBITDA multiple of 12x) on the stock. It sees further downside risk to order inflow and the revenue assumption for FY23E/FY24E.
Promoter/FII Holdings
Promoters held 63.2 per cent stake in the company as of June 30, 2021, while FIIs held 4.7 per cent, DIIs 12.4 per cent and public and others 19.8 per cent.
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