Bhel 06/07 profit up 47%, shares rise

Bhel 06/07 profit up 47%, shares rise
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First Published: Tue, Apr 03 2007. 04 52 PM IST
Updated: Tue, Apr 03 2007. 04 52 PM IST
Bharat Heavy Electricals Ltd., India’s top maker of electrical equipment, said on 3 April its provisional profit for the year to March 2007 rose 47% as its factories ran at full capacity producing generators, boilers and turbines.
Net income increased to Rs23.85 billion in the 12 months ended 31 March from Rs16.79 billion a year earlier, the New Delhi-based company said in a statement today. Revenue gained to Rs187 billion from Rs145.25 billion.
“There are no surprises in here,” said Dhirendra Tiwari, an analyst at Batlivala & Karani Securities in Mumbai. “The earnings are in line with market expectations. And the story is expected to continue for the next couple of years as BHEL sees more orders from the power sector.” Tiwari has a “buy” rating on the stock.
India, the world’s second-fastest growing major economy, aims to boost power-generation capacity by more than 50% by 2010 to ease shortages from rising energy use. The plan has helped drive the order backlog for Bharat Heavy, which has built plants that generate two-thirds of India’s electricity, to Rs550 billion as of 31 March.
India needs to expand electricity output by 56% to 200,000 megawatts by 2010 to help sustain annual growth of 8% in Asia’s fourth-largest economy. Such a pace would need the power industry to maintain an expansion rate of at least 10- 12 %, A.K. Puri, chairman and managing director of Bharat Heavy, told shareholders on 15 September.
State-run Bhel said in a statement it expects turnover in the 2006/07 financial year to reach Rs187 billion, up 29.8 % from the year before.
The firm is targeting turnover of $10 billion by the 2011/12 financial year, it said. Provisional profit in the year to March 2006 was Rs16.21 billion.
At 0741 GMT the firm’s shares were trading 5.19% higher at Rs2,265.4 in a Mumbai market up 1.3%.
BHEL, whose equipment brings electricity to three out of four Indian homes, said it was aiming to raise capacity to produce enough equipment to generate 15,000 megawatts (MW) of electricity per year by 2011/12.
That expansion would require an investment of Rs32 billion, the company, described by the government as a crown jewel, said.
It had outstanding orders worth around Rs550 billion on 31 March.BHEL has been looking to acquire companies to boost growth and the statement said the firm would pursue mergers and acquisitions to boost its presence at home and abroad.
The state-run company gives full-year provisional numbers in the first week of April every year. It announces audited fourth-quarter earnings later in the month.
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First Published: Tue, Apr 03 2007. 04 52 PM IST