BHEL Q4 results preview: Lockdown in execution-heavy quarter to hit profit by up to 65%

NEW DELHI: Capital goods major BHEL is expected to report up to 65 per cent drop in profit for the March quarter on fall in execution level due the lockdown. Sales is expected to fall by up to 30 per cent while margins are expected to fall drastically by up to 770 basis points.

Analysts said March quarter was an execution-heavy quarter for capital goods companies, whose deliveries were hit by lockdown in the last week of March.

Emkay Global expects BHEL to report a 29 per cent drop in sales, as March accounts for a significant chunk of its full-year revenues. It expects further deterioration in working capital due to the lost fortnight of March where payments could have come through. This brokerage pegs profit at Rs 239 crore, down 64.9 crore YoY over year-ago quarter's Rs 682.70 crore profit. It sees Ebitda margin at 5.9 per cent for the quarter compared with 13.5 per cent in the March quarter of last year, down 770 basis points.


"BHEL’s revenue is likely to fall 20 per cent YoY to Rs 8,242 crore as execution in March is likely to get impacted amid the lockdown. Ebitda margin is likely to fall 490 bps YoY to 8.6 per cent while PAT is likely to decline 37.9 per cent YoY to Rs 423.80 crore, owing to low operating profit and higher interest cost," said Nirmal Bang Institutional Equities.

IIFL Securities said, revenues will be marred by execution and cash flow concerns in EPC projects in T Genco. Slippages, it said, is expected in projects on delayed shipments from China for materials and due to the lockdown in India.

"Slippage in execution increases book-to-bill to 4.5 times TTM sales," it said, while expecting a 46 per cent drop in profit for BHEL at Rs 370 crore. It sees sales falling 21 per cent to Rs 8,200 crore. Order inflows are seen falling 20 per cent to Rs 5,300 crore while order book is expected to drop 6 per cent to Rs 1,06,600 crore.