BHEL declines by around 18% today amid Q4 losses – Check brokerages ANALYSIS

Amid weak quarter four results, Bharat Heavy Electricals Limited (BHEL) shares declined by around 18 per cent to the day’s low level of Rs 62.55 per share on the BSE intraday during early trade on Monday as against the previous close of Rs 76.2. 

BHEL, a state-owned engineering firm, on Friday, reported a consolidated net loss to Rs 1,036.32 crore in the March 2021 quarter, mostly on the back of higher revenues. While the total income of the company during 2020-21 dropped to Rs 17,657.11 crore, from Rs 22,027.44 crore in 2019-20. 

In this regard, CLSA maintaining a SELL rating on BHEL after Q4 results, said the quarter was weak given the company’s execution, cuts FY22 EPS by seven per cent. It pointed out whether this is a precursor to divestment remains to be seen, downgrades the target price to Rs 40 per share. 

BHEL reported weak results on execution, gross margin, and working capital, Kotak Institutional Equities said, maintaining a Sell stance on the stock with a target of Rs 34 per share. It pointed out the company reported weak results on execution, gross margin, and working capital. 

It further said, provisions/write-off taken, cast doubts on the ability to release remaining working capital and weak gross margin casts doubts on its ability to report top-line high enough to cover fixed costs. 

Statin that BHEL delivered a disappointing quarter, Goldman Sachs said the company does not warrant current high multiple, while maintaining a SELL on the stock by downgrading the price to Rs 23 per share. The brokerage firm expects, even in FY22, the company won’t generate any profit. 

The company in its filing to exchanges said, the nationwide lockdown, consequent to the spread of the Covid-19 pandemic globally, caused disturbance and slowdown in the economic activities and impacted the group operations during 2020-21, which recouped progressively.