Kotak Institutional Equities downgrades BHEL to sell, cuts fair value to Rs 46

Kotak Institutional Equities has downgraded BHEL to sell from reduce in the long term and cut fair value to Rs 46 from Rs 56. The stock ended down 1.4% at Rs 53.8 on Thursday while the BSE Sensex closed 170.42 points up at 40,286.48.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 6030.16 crore, up 36.70% from last quarter sales of Rs 4411.09 crore. The company reported net profit after tax of Rs 113.60 crore in the latest quarter.


Investment Rationale

The linkage between BHEL’s cash profits and cash flows has broken over the past one year, said KIE. Diversification beyond the power segment is not significant to overcome pressures of weak commercial terms and cash flow profile of BHEL’s power customers, the brokerage said.