Bharat Heavy Electricals Ltd (BHEL) shares tanked as much as 6.7% in intraday trade on Wednesday after the state-owned engineering company’s earnings for the third quarter ended December (Q3) disappointed investors.
At 10:29 am, BHEL shares were trading 5.3% lower at Rs 36.50 apiece after hitting the day’s low of Rs 35.95, their lowest level in 52 weeks. The stock has plunged nearly 41% in the last one year compared with a 12% rise in the benchmark Nifty 50 index during the period.
BHEL on Tuesday said consolidated net profit fell 17% to Rs 161.81 crore for the December quarter compared with Rs 196.43 crore a year ago. Revenue took a sharp hit, falling 22.6% to Rs 5,679.3 crore in the December quarter compared with Rs 7,336.4 crore a year ago.
At the operating level, earnings before interest, tax, depreciation and amortisation (Ebitda) rose 50.3% to Rs 328 crore in the December quarter, while Ebitda margin was up 280 bps to 5.8% compared with a year ago.
After the earnings announcement, brokerage firm Morgan Stanley issued an ‘underweight’ rating on the BHEL stock with a target of Rs 37 per share. It said the company’s Ebitda growth is below consensus and estimates. Slower execution could be due to delayed receivables, noted the brokerage firm.
Another global brokerage firm Jefferies also gave an ‘underperform’ rating on BHEL shares, while cutting the target price to Rs 33 from Rs 37 earlier. The margin offsets the revenue decline impact, said the brokerage firm, adding that Q3 Ebitda was in-line with expectations after several quarters of disappointment. The 20% revenue decline could be made up in the fourth quarter, Jefferies said. It also believed that BHEL’s generation capex will remain muted due to overcapacity.
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