KRChoksey is bullish on Bharat Heavy Electricals(BHEL) and has recommended buy rating on the stock with a target of Rs 2258 in its July 28, 2011 research report.
“BHEL Q1FY12 results are much below our and consensus estimates. Net sales grew by 10% YoY against the street’s expectation of 19-20% growth largely on the back of dismal performance of power segment (79% of revenue in FY11), which grew by 7% YoY. Power segment was impacted by the macro headwinds affecting the sector in form of environmental clearances, coal linkages and high cost of capital. Industrial segment grew by a modest 12% affected by the slowdown in investment cycle. EBIT margins in the power segment declined by 335 bps YoY as the company booked lower margin orders secured through competitive bidding.”
“Order inflows during the quarter were a dismal Rs. 2,479 crore (down 76% YoY and 89% QoQ) about 3.7% of the order inflows guidance for FY12. Power segment was a blackout with inflows of only Rs. 289 crore largely on account of delay in finalisation of some large tenders. Order inflows in the power segment points towards the near term weakness in the sector. Although, nothing decisive could be inferred as power segment orders are lumpy in nature and are skewed towards the second half of the year. Company has indicated that 9,000 MW of orders including NTPC bulk tender (800*9) are in the advance stages of finalisation. BHEL has maintained its guidance for FY12 topline growth and order inflows. Company expects the topline to grow by 17-18% in FY12 and order inflows to be the tune of Rs. 66,550 crore.”
“We maintained our earning estimates for the company in FY12 and FY13 notwithstanding the below expectation results as the first quarter typically makes the lowest contribution to the annual earnings. At the CMP of Rs. 1,822, stock is currently trading at ~13.7 x FY12 earnings and offers a favorable risk reward ratio. However, considering the macro headwinds in the Power sector and near term weakness, we have downgraded our multiple for the company and have valued it at ~17x FY12 earnings. We maintain ‘BUY’ on the stock with a 12- months target price of Rs 2258,” says KRChoksey research report.
Promoters who have pledged maximum shares in their company
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
“BHEL Q1FY12 results are much below our and consensus estimates. Net sales grew by 10% YoY against the street’s expectation of 19-20% growth largely on the back of dismal performance of power segment (79% of revenue in FY11), which grew by 7% YoY. Power segment was impacted by the macro headwinds affecting the sector in form of environmental clearances, coal linkages and high cost of capital. Industrial segment grew by a modest 12% affected by the slowdown in investment cycle. EBIT margins in the power segment declined by 335 bps YoY as the company booked lower margin orders secured through competitive bidding.”
“We maintained our earning estimates for the company in FY12 and FY13 notwithstanding the below expectation results as the first quarter typically makes the lowest contribution to the annual earnings. At the CMP of Rs. 1,822, stock is currently trading at ~13.7 x FY12 earnings and offers a favorable risk reward ratio. However, considering the macro headwinds in the Power sector and near term weakness, we have downgraded our multiple for the company and have valued it at ~17x FY12 earnings. We maintain ‘BUY’ on the stock with a 12- months target price of Rs 2258,” says KRChoksey research report.
Promoters who have pledged maximum shares in their company
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
No comments:
Post a Comment