BHEL Falls 9% On Weak Q3 Results

On Monday, shares of Bharat Heavy Electricals Limited (BHEL) declined as much as 9.18% to Rs 39.55 on BSE after the company reported a loss of Rs 231 crore for the December-ended quarter due to poor operational performance. In comparison, the company had posted a profit after tax of Rs 159 crore in the same period a year ago.

BHEL's turnover during the quarter under review fell 23% at Rs 4,203 crore impacted by execution headwinds and pandemic. It posted a loss of earnings before interest, taxes, depreciation, and amortization of Rs 94 crore against a profit of Rs 480 crore in the year-ago quarter.

In the December-ended quarter, its order inflow came it at Rs 3,890 crore, while its order backlog was Rs 1.07 trillion, (80% executable) comprising power (Rs 86,325 crore), industry (Rs 13,057 crore) and exports (Rs 7,304 crore).

Sentiments towards the stock were also affected by media reports suggesting that the BHEL may be among the candidates that BHEL is considering for the next round of its divestment sales.

Nomura India has placed its target price on the stock at Rs 25 per share, a 43% downside from Friday's closing price as the brokerage said that BHEL continued to see operational cash inflows but at a reduced pace. It said that the orders remained weak and noted that recent orders appear to have been on lower gross margins, as gross margin for the quarter at 30% was significantly lower than historic levels.