BHEL Shares Fall Even As It Turns Profitable In Q2

Shares of Bharat Heavy Electricals Ltd. dropped despite the company turning profitable in the second quarter.

BHEL reported a net profit of Rs 12.10 crore in the three months ended September compared with a loss of Rs 46.6 crore over a year earlier, according to its exchange filing.

Other income for the quarter rose fourfold year-on-year to Rs 216.17 crore. Power segment sales contributed to the higher income.

BHEL Q2 FY23 Highlights (YoY)

• Revenue from operations rose to Rs 4,927.95 crore as against Rs 4,910.62 crore, as overall sales from the power segment grew.

• Sales from the power segment were higher at Rs 3,814.4 crore, compared with Rs 3,586.3 crore a year earlier.

• Industry segment sales were lower at Rs 1,113.6 crore as against Rs 1,324 crore.

• Operating loss for the period widened to Rs 518.54 crore from Rs 231.5 crore due higher expenses.

• Operating margins were lower at -10.52%, compared with -4.71% a year earlier.

According to an Axis Capital report, there was an all-around profit and loss miss in the second quarter. Revenue was flat, with no pick-up in execution even post-Covid-19. While underlying business operations were loss-making in Q2, the company managed to report a profit, the report said.

BHEL has signed pacts to jointly set up a coal-to-ammonium nitrate project with Coal India and a lignite-based gasification pilot plant with NLC India for power generation.

Axis Capital has retained a ‘sell’ rating with a target price of Rs 36, implying a 51% potential downside.

The total traded quantity is 2.0 times the 30-day average.

Of the 21 analysts tracking the company, three maintain a ‘buy,’ three suggest a ‘hold,’ and 15 recommend a ‘sell’, according to Bloomberg data. The return potential of the stock implies a downside of 26.6%.

Shares of BHEL fell 4.57% to 72.05 apiece compared with a 0.04% gain in the benchmark Nifty 50 at 2:37 p.m.