Bharat Heavy Electricals Ltd (Bhel) –Hold- Anand Rathi
Bhel reported higher sales, though earnings matched expectations. Order inflow of Rs590bn beat the earlier “guidance” while the order backlog is at an all-time high Rs1,430 billion.
Bhel reported a 22% y-o-y increase in turnover, to Rs340 billion. Profit-before-tax of Rs63.5bn and profitafter-tax of Rs42.9 billion rose 31% and 37% y-o-y, respectively. Q4 sales and profit-after-tax grew 40% y-o-y to Rs147 billion and Rs18.9 billion, respectively.
The unexecuted order book grew 22% y-o-y (7% q-o-q) to Rs1,430 billion. Order inflows of Rs590 billion were higher than the “guidance” of Rs550 billion. Bhel announced large orders in the quarter: Indian Oil, Pipavav Energy, the Indiabulls Group, PowerGrid and the Karnataka Power Corp.
Capacity expansion to 20 GW by FY12, indigenizing supercritical technology, newer product line expansion (270/525/600 MW sub-critical sets) and strategic alliances/ JVs would be key to achieve a turnover of Rs450bn by FY12, and Rs919 billion by FY17.
We maintain our target price of Rs2,360 and retain our HOLD as we see little upside and fewer valuation triggers in the near future.
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