The slowdown in investments in the power sector has taken a toll on the performance of Bharat Heavy Electricals (Bhel) with the engineering firm?s profits crashing nearly 50%, for the April-June quarter, to Rs 465.43 crore. The numbers missed analysts estimates by a wide mark. On a sequential basis, the decline in Bhel?s net profit was even sharper at 85%.
The power equipment maker?s net sales in the April-June quarter were down sharply to Rs 6352.55 crore, a 23% fall year-on-year. On a quarter-on-quarter basis, the decline in net sales was a whopping 66% over Rs 18,850 crore. The firm?s profits fell despite the fact that total expenses were lower by 16.5% y-o-y at Rs 6,300 crore in Q1 FY14.
Since the end of May, the stock has lost more than a fourth of its value.
The country?s other large engineering firm Larsen and Toubro had also reported disappointing results for Q1 FY14 with net profits falling 12% y-o-y to Rs 756 crore. However, L&T?s revenues rose just 5% y-o-y to Rs 12,555 crore.
Bhel?s order book has shrunk to Rs 1.08 lakh crore at the end of the June quarter, down from Rs 1.33 lakh crore at the end of June 2012 and Rs 1.15 lakh crore at the end of March 2013. In contrast, L&T?s orderbook at the end of June was Rs 1.65 lakh crore compared with Rs 1.54 lakh crore at the end of March 2013.
Interestingly after Bhel?s revenues in Q4 FY13, as also the Ebitda margins, came in ahead of the Street?s estimates, analysts had drawn attention to the fact saying that while sales were well ahead of expectations ? which the management attributed to robust execution ? it was surprising that receivables were at 290 days, which appeared to be an aberration. ?We wonder whether there is an element of advancement of future sales to meet FY13 MoU targets, given the nature of revenue recognition,? Citigroup had said in a May report.