BHEL slumps 4% as analysts worry over margin recovery, cash loss

“The absence of such writebacks may impede recovery in profitability from hereon,” cautioned Kotak Institutional Equities. It also highlighted BHEL’s deteriorating situation of cash loss, which is suggestive of the company’s stiff working capital situation.

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Shares of Bharat Heavy Electricals Ltd (BHEL) slumped 4 percent with the company reporting a consolidated net loss of Rs 343.89 crore in the June quarter as against a net profit of Rs 187.99 crore in the year ago period.

Further, EBITDA (Earnings Before Interest Tax Depreciation and Amortization) loss widened to Rs 539.15 crore in the quarter under review from a loss of Rs 392.44 crore in the corresponding period last year.

Gross margin also declined 100 bps YoY and 200 bps QoQ, and was 1,350 bps lower than the pre-Covid levels, highlighted Kotak Institutional Equities.

At 2:11 pm, shares of the company were trading 2.8 percent lower at Rs 96.15 on the BSE.

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Moreover EBITDA was in the red potentially reflecting nil provision writebacks for the quarter, the brokerage firm said. “The absence of such writebacks may impede recovery in profitability from hereon,” cautioned the domestic brokerage firm.

Another point that Kotak Institutional Equities highlighted was BHEL’s deteriorating situation of cash loss, which is suggestive of the company’s stiff working capital situation.

Though, revenue was up 8 percent at Rs 4818.37 crore.

Thermal ordering timeline, growth from non-thermal areas such as rail, defence, and hydrogen, and realisation of provisions remains some of the key checkable for BHEL, according to Nuvama Institutional Equities.

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