Home / Markets / Mark To Market /  Tepid earnings of Bhel disappoint investors again

For Bharat Heavy Electronics Ltd (Bhel), the three months ended September (Q2FY22) was yet another loss making quarter, providing no respite to its investors.

Consolidated net loss in Q2FY22 was 45.98 crore against the 552.02 crore loss a year ago. Income from operations rose 43% year-on-year (y-o-y) to 4,910.62 crore. The firm’s management said disruption caused by the pandemic led to a revenue loss of around 1,500 crore in Q2FY22 as it stopped executing orders where cash flow issues existed. It wasn’t surprising then that firm’s shares fell nearly 8% on NSE on Wednesday. With that, the Bhel stock was third-biggest loser among F&O Securities.

A subdued quarter
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A subdued quarter

Bhel’s losses have narrowed but there are some parameters where it is yet to show significant growth, analysts said. The firm’s pending receivables stood at 31,200 crore in H1FY22 compared to 31,300 crore at the end of FY21. Receivables from central and state governments were 36% and 42% while the rest was from private firms and exports. “Despite 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. Around 50% of the order book is fixed cost contracts, thus posing a risk to margins amid rising commodity prices, they said.

Of the total order book of 1.1 trillion in Q2FY22, the executable order book was 9,000 crore. According to the management, ordering in the FGD segment is expected to remain modest. But the solar and refinery segments are witnessing order activity, with awarding expected gradually, it said.

Apart from weak ordering and elevated receivables, Bhel continues to face issues of high working capital, denting its operating performance. Unless these factors fall in place, the stock is unlikely to see a major improvement, analysts said.

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