Bhel stock down 6% on disappointing Q2 earnings

Market


For Bharat Heavy Electronics Ltd (Bhel), the three months ended September (Q2) was yet another loss making quarter, providing no respite to its inventors.

Consolidated net loss in Q2FY22 stood at 45.98 crore compared with 552.02 crore loss a year ago. Income from operations rose 43% year-on-year (y-o-y) to 4,910.62 crore. The company’s management said the pandemic-led disruption led to a revenue loss of around 1,500 crore in the September quarter of the current fiscal as it stopped executing orders where cash flow issues existed.

Little surprising then that shares of the company fell around 6% on the National Stock Exchange in opening deals on Wednesday. With that, the Bhel stock was the biggest loser among F&O Securities.

Even though its losses have narrowed, there are some other parameters where the company is yet to show significant growth, analysts said. For instance its pending receivables, with total debtors at 31,200 crore in 1HFY22 compared with 31,300 crore at the end of FY21 with Centre/state/private/exports constituting 36%/42%/14%/8%.

“In spite of the management’s ongoing efforts, we expect receivables to remain elevated in the near future,” analysts at Motilal Oswal Financial Services Ltd said in a report. They added that around 50% of the order book is fixed cost contracts, thus posing a risk to margin amid rising commodity prices. 

In the September quarter, of the total order book of 1.1 trillion, executable order book stood at 9,000 crore. According to the company’s management, ordering in the FGD segment is expected to remain modest. On the brighter side, the solar and refinery segments are witnessing order activity, with awarding expected gradually, the management added.

Apart from weak ordering and elevated receivables, the company continues to grapple with issues of high working capital denting its operating performance. So, analysts say, unless these factors fall in place, the stock is unlikely to see a major up move.

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