Dear All,
Forwarding you the Result Update on BHEL for 4QFY2011 with a Neutral Recommendation.
BHEL’s 4QFY2011 results were lower than our estimates on the top-line and bottom-line front. Similar to 3QFY2011, numbers during 4QFY2011 were positively affected due to accounting adjustments. Inclusive of the above adjustments, BHEL’s revenue grew by 31.8% yoy to `18,380cr (5% lower than our estimates of `19,336cr), while PAT grew by 46.5% yoy to `2,798cr (2.8% lower than our estimate of `2,880cr). We maintain our Neutral view on the stock.
Stellar growth with impressive margins: For 4QFY2011, the company’s revenue posted robust growth of 31.8% yoy to `18,380cr. EBITDA also grew handsomely by 49.5% yoy to `4,294cr, primarily on the back of a 276bp yoy margin expansion to 23.4%. Notably, other expenses rose sharply by 181.8% to `3,667cr (`1,301cr) mainly on account of warranty provisions created due to modified accounting practices. Strong growth coupled with higher margins led to 46.5% yoy growth in PAT to `2,798cr (`1,910cr).
Outlook and valuation: Given the growth prospects in the domestic power sector, Indian companies have set up or have initiated the process of setting up local manufacturing facilities in collaboration with leading international players. As per industry sources, BTG capacity addition in the country is expected to touch 36GW by 2013, signaling adequate supply of power equipment. With competition intensifying from domestic as well as overseas players, we believe it will be difficult for BHEL to maintain its existing profitability margins and its current market share in the long term. At the CMP of `1,921, the stock is quoting at 14.4x FY2012E EPS and at 12.3x FY2013E EPS. Given the long-term structural concerns, we maintain our Neutral view on the stock.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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