Recommend HOLD CMP 120.00 Target Price 134.00 ISIN: INE257A01026 SEPTEMBER 2 nd , 2013 BHARAT HEAVY ELECTRICALS LTD Q1 FY14 STOCK DETAILS Sector Engineering BSE Code 500103 Face Value 2.00 52wk. High / Low (Rs.) 272.45/100.35 Volume (2wk. Avg ) 209000 Market Cap ( Rs in mn ) 293712.00 Annual Estimated Results (A*: Actual / E*: Estimated) Years FY13A FY14E FY15E Net Sales 484247.00 489089.47 493980.36 EBITDA 105111.00 96188.28 102290.58 Net Profit 66147.00 59054.03 61804.84 EPS 27.03 24.13 25.25 P/E 4.44 4.97 4.75 Shareholding Pattern (%) 1 Year Comparative Graph BHARAT HEAVY ELECTRICALS LTD BSE SENSEX SYNOPSIS Bharat Heavy Electricals Ltd engaged in the design, engineering, testing, manufacture, construction, commissioning & servicing of a wide range of products and services for the core sectors of the economy. The company net profit falls to Rs. 4654.30 million against Rs. 9209.00 million in the corresponding quarter ending of previous year, a decrease of 49.46%. Revenue for the quarter declines by 23.47% to Rs. 64581.20 million from Rs. 84390.10 million, when compared with the prior year period. EBITDA is Rs. 9270.60 millions as against Rs. 15684.60 millions in the corresponding period of the previous year. The company has an outstanding order book position of about Rs. 1086000 million at the end of Q1 FY14. BHEL has won a contract from BPCL for its Integrated Refinery Project at Kochi Refinery in Kerala, valued at around Rs. 2650 Million. BHEL has won major turnkey contracts for setting up two eco-friendly Grid-Connected Solar Power Plants of 10 MW capacity each, valued at Rs.1320 Million from NTPC. BHEL bags Rs. 4500 mn World Bank funded Renovation and Modernization Contract for 210 MW thermal unit at Koradi TPS in Maharashtra. During the year 2012-13, BHEL invested an all-time high Rs. 12,520 Million on R&D initiatives, over 4% higher than the previous year. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND COMPANY NAME (Rs.) Rs. in Mn. (Rs.) Ratio Ratio (%) BHEL Ltd 120.00 293712.00 27.03 4.44 0.96 270.50 ABB Ltd 454.20 96248.80 5.71 79.54 3.70 150.00 ALSTOM India Ltd 307.90 20699.30 29.43 10.46 2.58 100.00
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Recommend HOLD
CMP 120.00
Target Price 134.00
ISIN: INE257A01026 SEPTEMBER 2nd
, 2013
BHARAT HEAVY ELECTRICALS LTD
Q1 FY14
STOCK DETAILS
Sector Engineering
BSE Code 500103
Face Value 2.00
52wk. High / Low (Rs.) 272.45/100.35
Volume (2wk. Avg ) 209000
Market Cap ( Rs in mn ) 293712.00
Annual Estimated Results (A*: Actual / E*: Estimated)
Years FY13A FY14E FY15E
Net Sales 484247.00 489089.47 493980.36
EBITDA 105111.00 96188.28 102290.58
Net Profit 66147.00 59054.03 61804.84
EPS 27.03 24.13 25.25
P/E 4.44 4.97 4.75
Shareholding Pattern (%)
1 Year Comparative Graph
BHARAT HEAVY ELECTRICALS LTD BSE SENSEX
SYNOPSIS
Bharat Heavy Electricals Ltd engaged in the design,
engineering, testing, manufacture, construction,
commissioning & servicing of a wide range of
products and services for the core sectors of the
economy.
The company net profit falls to Rs. 4654.30 million
against Rs. 9209.00 million in the corresponding
quarter ending of previous year, a decrease of
49.46%.
Revenue for the quarter declines by 23.47% to Rs.
64581.20 million from Rs. 84390.10 million, when
compared with the prior year period.
EBITDA is Rs. 9270.60 millions as against Rs.
15684.60 millions in the corresponding period of the
previous year.
The company has an outstanding order book position
of about Rs. 1086000 million at the end of Q1 FY14.
BHEL has won a contract from BPCL for its
Integrated Refinery Project at Kochi Refinery in
Kerala, valued at around Rs. 2650 Million.
BHEL has won major turnkey contracts for setting up
two eco-friendly Grid-Connected Solar Power Plants
of 10 MW capacity each, valued at Rs.1320 Million
from NTPC.
BHEL bags Rs. 4500 mn World Bank funded
Renovation and Modernization Contract for 210 MW
thermal unit at Koradi TPS in Maharashtra.
During the year 2012-13, BHEL invested an all-time
high Rs. 12,520 Million on R&D initiatives, over 4%
higher than the previous year.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
COMPANY NAME (Rs.) Rs. in Mn. (Rs.) Ratio Ratio (%)
BHEL Ltd 120.00 293712.00 27.03 4.44 0.96 270.50
ABB Ltd 454.20 96248.80 5.71 79.54 3.70 150.00
ALSTOM India Ltd 307.90 20699.30 29.43 10.46 2.58 100.00
Recommendation & Analysis - ‘HOLD’
For Q1 FY14, Bharat Heavy Electricals Ltd posted a revenue declines by 23.47% to Rs. 64581.20 million from
Rs.84390.10 million, when compared with the prior year period. During the year 2012-13, BHEL recorded a
turnover of Rs. 484247 mn. Profit before tax is Rs. 94324 mn and Profit after tax is placed at Rs. 66147 mn. Net
worth of the company has gone up from Rs. 253730 mn to Rs. 304440 mn registering an increase of 19.9%. Net
asset value (NAV) per share has been placed at Rs. 124.38 in 2012-13 as against Rs. 103.67 in 2011-12. During
2012-13, the Company has received orders worth Rs. 316500 mn as against Rs. 220960 mn in 2011-12. During
2012-13, BHEL added 3500 MW Capacity as against 1000 MW last year for NTPC. With this, BHEL's contribution
to NTPC's capacity of 41,184 MW stands at 70%. Udangudi Power Corporation Ltd. (UPCL) a joint venture
between BHEL & TNEB was incorporated on 26th December, 2008, to build, own and operate a 1600 MW (2x800
MW) Super Critical Thermal Power Plant at Udangudi. On 26.03.2013, BHEL has sold its entire stake in UPCL.
The company has an outstanding order book position of about Rs. 1086000 millions at the end of Q1 FY14. In Q1
FY14, The company net profit falls to Rs.4654.30 million against Rs.9209.00 million in the corresponding quarter
ending of previous year, a decrease of 49.46%. During the quarter Q1 FY14, the revenue from power segment
decreased by 21% to Rs. 53786 mn as against Rs. 67692.7 mn.
Power sector will continue to remain major contributor to company’s top line with transportation and
transmission emerging as next big business verticals. Strategies are in place to strengthen its presence in
Nuclear, Renewable and Water segments. The company is continuously sharpening its focus on ‘6-Point’ priority
areas for action viz. Capability Enhancement, Accelerated Project Execution, Product Cost Competitiveness &
Quality, Diversification, Engineering & Technology and People Development aligned with its Strategic Plan
initiatives to sustain its leadership position in its areas of operations. Hence, we recommend ‘HOLD’ for
‘Bharat Heavy Electricals Ltd’ with a target price of Rs. 134.00 on the stock.
FINANCIAL HIGHLIGHTS STANDALONE
Results updates- Q1 FY14,
Bharat Heavy Electricals Ltd is an integrated power
plant equipment manufacturer and one of the
largest engineering and manufacturing companies in
India, reported its financial results for the quarter
ended 30th June, 2013.
Months Jun-13 Jun-12 % Change
Net Sales 64581.20 84390.10 (23.47)
PAT 4654.30 9209.00 (49.46)
EPS 1.90 18.81 (89.89)
EBITDA 9270.60 15684.60 (40.89)
The company net profit falls to Rs.4654.30 million against Rs.9209.00 million in the corresponding quarter
ending of previous year, a decrease of 49.46%. Revenue for the quarter declines by 23.47% to Rs. 64581.20
million from Rs.84390.10 million, when compared with the prior year period. Reported earnings per share of the
company stood at Rs.1.90 a share during the quarter, registering 89.89% decrease over previous year period.
Profit before interest, depreciation and tax is Rs.9270.60 millions as against Rs.15684.60 millions in the
corresponding period of the previous year.
Expenditure :
Break up of Expenditure
Rs. Million
Q4 FY13 Q4 FY12
Cost of Material Consumed, erection & engineering expenses
34821.00 53849.70
Other Expenditure 9605.40 9840.40
Depreciation & Amortization Expense
2308.00 2283.90
Employee Benefit Expenses 14749.50 13950.10
Total Expenditure 63003.40 74652.10
Segment Revenue
Latest Updates
• The company has an outstanding order book position of about Rs. 1086000 millions at the end of Q1 FY14.
• Bharat Heavy Electricals Limited (BHEL) has been conferred the ‘ICAI National Award for Excellence in Cost
Management 2012’.
• BHEL wins Rs.2650 Million contract from BPCL for Kochi Refinery project
BHEL has won a contract from Bharat Petroleum Corporation Ltd for its Integrated Refinery Project (IREP) at
Kochi Refinery in Kerala, valued at around Rs. 2650 Million. The order envisages supply and supervision of 3
nos. Gas Turbines of 34.5 MW rating each, with associated auxiliaries and control systems.
• BHEL secures major turnkey contract for Grid-Connected Eco-friendly Solar Power Plants from NTPC
BHEL has won major turnkey contracts from NTPC for setting up the eco-friendly Grid-Connected Solar
Photovoltaic (SPV) power plants, each of 10 MW capacities, at Unchahar in Uttar Pradesh and Talcher in
Odisha, valued at Rs.1320 Million.
• BHEL bags Rs.4500 mn World Bank funded Renovation and Modernization Contract for 210 MW
thermal unit at Koradi TPS
BHEL has won a prestigious order for the Energy Efficient Renovation & Modernization (EE R&M) of a 210
MW thermal unit in Maharashtra by the Maharashtra State Power Generation Corporation Limited
(MSPGCL). The World Bank-funded contract Rs.4500 mn under International Competitive Bidding (ICB). The
order envisages design, supply and installation for the EER&M of the 1x210 MW Boiler, Turbine and
Generator package for the 210 MW Unit 6 at Koradi Thermal Power Station (TPS).
• BHEL registers significant increase in Intellectual Capital; Files one Patent a day
BHEL has recorded a 10% growth in its Intellectual Capital in FY 2012-13. During the year 2012-13, the
company has filed a 385 patents and copyrights, translating into filing of over one patent / copyright every
working day. With this, the company’s intellectual capital has gone up to 2,170 patents and copyrights filed,
which are in productive use in the company’s business. During this period, BHEL invested an all-time high
Rs.12,520 Million on R&D initiatives, over 4% higher than the previous year. With an R&D spend at nearly
2.5% of its turnover; BHEL is the highest spender on R&D in India for its kind of industry.
Company Profile
Bharat Heavy Electricals Ltd is an integrated power plant equipment manufacturer and one of the largest
engineering and manufacturing companies in India, which was established in the year 1964, ushering in the
indigenous Heavy Electrical Equipment industry in India - a dream that has been more than realized with a well-
recognized track record of performance. BHEL is truly India’s industrial ambassador to the world.
The Company engaged in the design, engineering, manufacture, construction, testing, commissioning and
servicing of a wide range of products and services for the core sectors of the economy, viz. Power, Transmission,
Industry, Transportation, Renewable Energy, Oil & Gas and Defence. The company has 16 manufacturing
divisions, two repair units, four regional offices, eight service centres, and 15 regional centres and currently
operates at more than 150 project sites across India and abroad. BHEL research and development (R&D) efforts
are aimed not only at improving the performance and efficiency of existing products, but also at using state-of-
the-art technologies and processes to develop new products.
The high level of quality & reliability of products is due to adherence to international standards by acquiring and
adapting some of the best technologies from leading companies in the world including General Electric Company,
Alstom SA, Siemens AG and Mitsubishi Heavy Industries Ltd., together with technologies developed in the
company own R&D centres. Most of manufacturing units and other entities have been accredited to Quality
Management Systems (ISO 9001:2008), Environmental Management Systems (ISO 14001:2004) and
Occupational Health & Safety Management Systems (OHSAS 18001:2007).
BHEL have a share of around 57% in India's total installed generating capacity contributing 69% (approx.) to the
total power generated from utility sets (excluding non-conventional capacity) as of March 31, 2013. The
company has been exporting power and industry segment products and services for approximately 40 years.
BHEL have exported products and services to across 75 countries. The Company had cumulatively installed
capacity of over 9,000 MW outside of India in 21 countries, including Malaysia, Iraq, the UAE, Egypt and
NewZealand.
Products
Bharat Heavy Electricals Ltd having the following products
• Power
• Industry
• Transmission
• Transportation
• Non Conventional Energy Source
• R&D Products
Services & Systems
The company has providing the following Service and the Systems