Bharat Heavy Electricals (BHEL) posted 41% YoY decline in 2QFY21 revenue at Rs36.9bn, 18%/20% below our/consensus estimate. Power segment revenue declined 41% YoY to Rs24.9bn (72% of total sales) while Industry segment revenue fell 47% YoY to Rs9.5bn (28% of total sales). Gross margin contracted by 170bps YoY to 35.5%. Lower revenue led to EBITDA loss of Rs6.3bn (higher than our/consensus loss estimate of Rs2.2bn each) and net loss of Rs5.6bn (higher than our/consensus estimated loss of Rs2.5bn/Rs2.4bn). Order inflow declined 50% YoY to Rs37.2bn while order backlog was flat YoY/QoQ at Rs1,076bn. Business operations at manufacturing plants are resuming to pre-COVID levels while project sites are...

Bharat Heavy Electricals (BHEL)'s 2QFY21 earnings were disappointing as revenue came in 27% below our estimates. Higher fixed cost dented operating performance, with operating level loss attributable to underabsorption of costs. The company is yet to show any significant improvement in pending receivables, with total debtors at INR349b in 1HFY21 (v/s ~INR360b at end-FY20). In spite of the company's ongoing efforts, we expect the receivables position to remain elevated in the near future. Order inflows remained weak, with 50% YoY decline in 2QFY21. We now expect BHEL to report operating-level loss in FY21E. While orders...

Deferral of key projects impacts order inflows During Q1FY21, order inflow was at | 1485 crore, down 62% YoY, (| 982 crore from power segment, | 442 crore from industrial segment, | 61 crore from exports segment). Bhel's order backlog as on Q1FY21 was at | 108126 crore (| 86603 crore in power, | 13447 crore in industrial, | 8073 crore in exports). Of total order backlog, executable orders were at 87967 crore. It is favourably placed in orders like Talcher power plant. However, few power projects including Lara, Singrauli and Pench power plants are getting...

Weak execution & higher than expected loss amid lockdown SELL Bharat Heavy Electricals (BHEL) posted 56% YoY decline in 1QFY21 revenue at Rs19.9bn, 5% above our estimate, but 21% below consensus estimate. Power segment revenue declined 68% YoY to Rs11.2bn (59% of total sales) while Industry segment revenue fell 15% YoY to Rs7.8bn (41% of total sales). Gross margin fell to 34.1% (vs. 42.5% YoY). Lower revenue led to negative EBITDA of Rs10.6bn (vs. negative Rs2.7bn YoY). The loss was higher than our/consensus estimate loss of Rs7.2bn/Rs6.8bn. PBT was negative Rs11.9bn. With deferred tax write-back of Rs3bn, net loss stood at Rs8.9bn (vs. loss of Rs2.2bn YoY). Net loss was...

BHEL secured orders worth Rs14.9bn in 1QFY21 translating into an order backlog of Rs1.1trn (5.7x trailing revenues). BHEL reported weak performance for the quarter wherein both segments Power/Industry revenue de-grew by 68%15% YoY. During the quarter order inflows de-grew by 62% YoY led by delay in ordering activity, deferment due to Covid-19 pandemic and overall stress in power sector. Order backlog stands at Rs1.08trn, flat YoY (executable OB ~Rs880bn) providing revenue...

We now expect BHEL to report loss in FY21E and have also reduced our FY22E earnings estimate by 21% to factor poor execution and a weak ordering environment. EBIT loss stood at INR2.5b (v/s profit of INR349m Order book (OB) was flat YoY at INR1081b, with OB/rev at 5.7x. Total receivables remain elevated at ~INR360b, of which 12% are from the private sector, 48% from state entities, 33% from the center, and 7% pertain cost at ~25% of sales. In FY20, working capital deteriorated to 99% of sales from 65% in FY19 due to higher inventory, slow movement in receivables, and poor We now expect BHEL to report loss in FY21E and have also reduced our FY22E earnings estimate by 21% to factor poor execution and a weak ordering environment. While the company has received EoIs from three major OEMs regarding its ongoing diversification drive, we believe any material financial impact is still some time away.

BHEL, a government owned entity, is India's largest engineering company and dominates the supply of equipment for power plants in India. Key products include gas turbines, generators, thermal sets, diesel shunters,...

Order inflows impacted by deferral of key projects During Q4FY20, order inflow came in at | 6405 crore, down 3.4% YoY, (| 3031 crore from power segment, | 3301 crore from industrial segment, | 73 crore from exports segment). For FY20, order inflows were at | 23547 crore, down 1%, YoY. Bhel's order backlog as on Q4FY20 was at | 108443 crore. It is favourably placed in orders like Talcher power plant. However, few projects in the power sector including Lara, Singrauli, Pench power plants are getting deferred for awarding/ tendering and likely to get awarded...

NBIE Values your patronage- Vote for The Team in the Asia Money poll 2020. Click Here COVID-19 impacts execution; Outlook remains hazy Bharat Heavy Electricals (BHEL) posted 51% YoY decline in 4QFY20 revenue at Rs50.5bn, much below our/consensus estimate of Rs82bn/Rs87bn, owing to loss of sales worth Rs40bn due to COVID-19 lockdown. Gross margin fell to 28.8% (vs. 42.9% YoY). Power segment revenue declined 61% YoY to Rs31.7bn (69% of total sales), while Industry segment revenue fell 18% YoY to Rs14.2bn (31% of total sales). Lower revenue led to negative EBITDA of...

EBITDA loss stood at INR5.6b (v/s profit of INR14b last year) due to lower absorption of fixed cost. EBIT loss stood at INR3.7b (v/s revenue was down 7% YoY to INR55b. Total receivables remain elevated at INR365b, of which 12% is from the private sector, 47% is from state entities, 34% is from the Center and 7% is BHEL continues to struggle on account of cost at ~25% of sales. In FY20, working capital deteriorated to 99% of sales from 65% in FY19 on account of higher inventories, slow movement in receivables We have cut our FY21E/FY22E earnings estimates by 46%/17% to account for the poor execution and weak ordering environment. EBIT loss stood at revenue was down 36% YoY to INR150b. EBIT loss stood at INR3.7b (v/s profit of INR349m YoY). BHEL continues to struggle on account of (a) the weak ordering environment in the power sector, (b) high receivables of INR365b, and (c) high employee cost at ~25% of sales in FY20.

BHEL reported weak performance for the quarter where both segments Power/Industry revenue de-grew by 61%18% YoY. During the quarter, order inflows de-grew by 5% YoY led by muted ordering activity, deferment due to Covid-19 Pandemic and overall stress in power sector. Current order backlog stands at Rs1.08trn that provides revenue visibility for the future. Despite...

BHEL, a government owned entity, is India's largest engineering company and dominates the supply of equipment for power plants in India. Key products include gas turbines, generators, thermal sets, diesel shunters,...

Weak execution; subdued order inflow; hazy outlook ACCUMULATE Bharat Heavy Electricals (BHEL) posted 23% YoY decline in 3QFY20 revenue at Rs56.8bn, 19%/26% below our/consensus estimate. Gross margin declined by 100bps YoY and 60bps QoQ to 36.6%, owing to pricing pressure. However, lower other expense (down 69% YoY to Rs3.8bn due to provision withdrawal of Rs1.9bn) led to 50% YoY rise in EBITDA to Rs3.3bn. Operating margin was up 280bps YoY at 5.8%, above our/consensus estimate of 4.5%/5.5%. Higher interest cost (up 141% YoY to Rs1.4bn) and lower other income (down 33% YoY to Rs1.5bn) led to 17% YoY decline in PAT at Rs1.6bn, 9%/32% below our/consensus estimate....

Order inflows impacted by delays in project finalisation During Q3FY20, order inflow came in at | 5950 crore, down 22.7% YoY, (| 3240 crore from power segment, | 2230 crore from industrial segment, | 480 crore from exports segment) while 9MFY20 inflows stands at | 17000 crore. Bhel's order backlog as on Q3FY20 was at | 107654 crore, of which executable order book is ~ | 87495 crore. Bhel is favourably placed in orders worth ~| 13000 crore (Talcher plant- | 6300 crore, FGD- | 4200 crore, industry segment- | 900 crore). However, few projects in power sector...

Net cash position as on date stands at Rs12bn. BHEL's 3QFY20 results were lower than our and consensus estimates. Execution continues to be subdued with ~23% YoY decline in revenues, led by de-growth in both Power and Industry segment. Order inflow de-grew by...

BHEL, a government owned entity, is India's largest engineering company and dominates the supply of equipment for power plants in India. Key products include gas turbines, generators, thermal sets, diesel shunters,...

Bharat Heavy Electricals (BHEL) posted 8% YoY decline in 2QFY20 revenue at Rs62.3bn, 8%/9% below our/consensus estimate. Gross margin declined by 420bps YoY to 37.2% as orders won at highly competitive pricing gets executed. Lower other expense (down 43% YoY to Rs5.8bn due to lower provisions) led to 11% YoY rise in EBITDA to Rs2.7bn. Operating margin was up 70bps YoY to 4.3%. Depreciation rose 129% YoY to Rs1.2bn while interest expense was up 72% YoY at Rs1.2bn. PAT fell 36% YoY to Rs1.2bn, below our/consensus estimate of Rs1.4bn each. Order inflow in 1HFY20 was low at Rs113bn while order backlog declined by 6% YoY to Rs1,086bn. BHEL has moderated execution of certain projects of...

Bharat Heavy Electricals (BHEL) posted 8% YoY decline in 2QFY20 revenue at Rs62.3bn, 8%/9% below our/consensus estimate. Gross margin declined by 420bps YoY to 37.2% as orders won at highly competitive pricing gets executed. Lower other expense (down 43% YoY to Rs5.8bn due to lower provisions) led to 11% YoY rise in EBITDA to Rs2.7bn. Operating margin was up 70bps YoY to 4.3%. Depreciation rose 129% YoY to Rs1.2bn while interest expense was up 72% YoY at Rs1.2bn. PAT fell 36% YoY to Rs1.2bn, below our/consensus estimate of Rs1.4bn each. Order inflow in 1HFY20 was low at Rs113bn while order backlog declined by 6% YoY to Rs1,086bn. BHEL has moderated execution of certain projects of...

PAT level Power sales (70% of sales) declined 18% YoY to INR42b, while Industrial sales (30% to sales) grew strongly by 24% YoY to INR18b. PBIT margin expanded 200bp YoY to 10.3% in Power but shrank 180bp YoY to 3.0% in Industrial segment. BHEL continues struggling on account of (a) the weak ordering environment in the power sector, (b) high receivables of INR380b and (c) high employee cost at ~21% of sales. We maintain rating on the stock with a TP of INR52 (15x FY21E EPS, in line with the 10-year average P/E). PBIT margin expanded by 200bp YoY to 10.3% in Power but shrank by 180bp YoY BHEL continues struggling on account of (a) the weak ordering environment in the power sector, (b) high receivables of INR380b and (c) high employee cost at ~21% of sales. We maintain our earnings estimates and a TP of INR52 (15x FY21E EPS, in line with the 10-year average P/E).

Reasonable order inflows across power, industrial business During Q1FY20, order inflow came in at | 3892 crore, down 11% YoY, of which power segment contributed | 1913 crore, industrial segment contributed | 1926 crore. Bhel's order backlog as on Q1FY20 was at | 107806 crore. The company has strengthened its position in emission control equipment (FGD) by wining further orders during the quarter and is favourably placed in orders worth ~| 14000 crore. It sees ~ 8-10 GW (~| 50000 crore) power sector opportunities to be finalised by year end. On...